OCADO CRASHES! SHARES FREE FALL AFTER SHOCKING £374M LOSS!
In a jaw-dropping turn of events, the Ocado Group (LSE:OCDO) saw its shares plunge a staggering 19% on February 27th, following the release of a disastrous financial report for the 52 weeks ending December 1 (FY24). Investors were left reeling as the retail and technology titan revealed a shocking loss of £374.3 million!
Despite this catastrophic setback, Ocado remains a heavyweight on the FTSE 250, with shares currently valued around 230p and a market-cap just shy of £2 billion. But hold on to your wallets, folks! There’s a dark cloud looming over the company’s prospects. Can we dream of a miraculous rise to £10 a share, or is it more realistic to brace ourselves for a crash landing to just £1? Let’s dive into this rollercoaster of financial chaos!
Glimmers of HOPE? TECHNOLOGY DIVISION SEES GROWTH!
Ocado’s operating divisions are mixed, but the Technology Solutions sector is where the real action is happening. This business is currently rolling out its cutting-edge Ocado Smart Platform (OSP) to a network of 13 global retail partners! This revolutionary system combines the power of AI with slick robots to optimize ecommerce and fulfilment services.
The numbers are somewhat promising, with revenues from this division sky-rocketing by 18.1% to an eye-popping £496.5 million during FY24. Plus, costs are down by 5%! But hang on – will this growth be enough to salvage Ocado’s sinking stock? The company is banking on the future with plans for 7 additional Customer Fulfilment Centres (CFCs) expected to open by FY27. But let’s not get ahead of ourselves; a four-fold increase in share price sounds more like wishful thinking!
DANGER AHEAD! IS £1 PER SHARE MORE LIKELY?
Ocado loves to flaunt its adjusted EBITDA, boasting a staggering £153.3 million for FY24 compared to last year’s paltry £51.6 million. However, amidst the bravado lie some hard truths, as the company suffers from massive depreciation and amortization that totaled a whopping £460.3 million in FY24, leading to relentless post-tax losses.
Despite promises of reduced depreciation charges and hopes of future profitability, at the end of FY24, Ocado’s net debt ballooned by 11.6% to a daunting £1.2 billion!
While the company’s retail division, the joint venture with Marks & Spencer, is reportedly flourishing with 1.1 million active shoppers, its big-time technology dreams still hang in the balance. With forecasts pointing towards cash flow positivity only by the second half of FY26, the big question remains: When will Ocado start raking in the profits?
FINAL SHOWDOWN: WILL OCADO GROW OR CRASH?
So here’s the bottom line: predicting the future of Ocado is like throwing darts in the dark! With so many unknowns and a slow uptake of their OSP technology, it’s looking more and more like £1 per share is the more likely outcome than the outrageous dream of £10.
I’m steering clear of investing in glory this time around! Buckle up – the Ocado saga is far from over!
