Ocado share price ends 2023 where it started: what next?

on Dec 28, 2023
  • Ocado stock price has risen by over 120% from its lowest point in 2023.
  • The shares are about to form a golden cross pattern on the daily chart.
  • The company enters 2023 with several tailwinds, including rate cuts.

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After making big moves in 2023, Ocado (LON: OCDO) share price is ending the year where it started. The stock was trading at 760p on Thursday, a few points above where it started the year. This price is 120% above its lowest point in 2023 and 27% below its highest level during the year.

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What next for Ocado?

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Ocado Group shares jumped to the year-to-date high of 1,016p in July after speculation that some companies like Amazon were considering buying the company. As I warned at the time, that deal was highly unlikely because of Ocado’s long history of underperformance and loss-making.

Ocado’s retreat was the opposite of what other British retailers did. Marks and Spencer, its joint venture partner, saw its stock surge to a record high of 274p. Similarly, Sainsbury’s jumped to over 300p while Tesco hit 304p.

Ocado’s financial performance was still under pressure in 2023 even as the company focused on profitability. In February, the company reported a big £500 million annual loss as its costs rose. 

In its most recent results, the company said that its retail revenue rose by 7.2% in the third quarter to £569 million. The number of average orders per week rose to 381 while the average basket value rose slightly to £120.72. 

Ocado has also made several milestones recently. In November, it secured a big deal from McKesson, a leading drug distributor. The deal will see the company receive upfront fees during the construction process. It will also receive another payment after completing the construction. Thereafter, Ocado will receive annual fees for maintaining the warehouses.

This is a big deal as Ocado attempts to diversify its business from groceries, where it serves companies like Casino, Aeon, and Kroger. Ocado will also use robots more in a bid to boost delivery speeds.

Therefore, fundamentally, Ocado is entering 2023 with numerous tailwinds. It is expanding from non-groceries, inflation is falling, and the Bank of England is expected to start cutting interest rates in the coming months. 

Ocado share price forecast

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ocado share price

OCDO chart by TradingView

On the daily chart, we see that the OCDO stock price has been in a strong uptrend in the past few months. The shares have risen from a low of 341.2p in June to a high of over 750p. Most importantly, the stock has formed a golden cross pattern, which is a bullish sign. This pattern happens when the 200-day and 50-day Exponential Moving Averages (EMA) make a crossover.

The Relative Strength Index (RSI) has continued rising. Therefore, the outlook for the stock is bullish, with the next point to watch being at 1,016p, the highest point on July 27th. This price is about 36% above the current price.


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