Ocado share price has become one of the worst-performing companies in the UK in the past few years. After peaking at 2,900p in January 2021 to the current 230p, a trend that may continue in the coming years as concerns about its business accelerate.
Still, technical analysis suggests that the stock may rebound in the coming weeks after forming a giant falling wedge pattern on the weekly timeframe chart.
Ocado woes continue with the planned layoffs
Ocado Group stock price has remained under pressure as concerns about its business has continued. These concerns accelerated this week after Reuters reported that the management plans to cut at least 1,000 jobs in the coming weeks.
These concerns accelerated last year when Kroger, a major customer, announced that it was shutting down three of its automated warehouses. Sobeys, another top client, also announced that it was shutting its robotics warehouse in Calgary.
There is a likelihood that other customers will either reduce their usage of Ocado’s robotics businesses, as many of them focus on other ways of handling their e-commerce solutions. For example, Kroger noted that it was considering using delivery applications like Instacart, Shipt, and DoorDash.
All this is happening as the company’s profitability remains elusive. The most recent results showed that the company’s revenue rose by 13% in the first half of last year to over £674 million. Its adjusted EBITDA rose to £92 million, while the underlying cash flow moved to a £109 million loss.
The results showed that its technology solutions revenue rose to £277 million, while its logistics business grew by 12% to over £397 million.
Ocado’s adjusted EBITDA to over £92 million, up by 40% from the same period in 2024. Therefore, the risk is that the actions by companies like Kroger and Sobeys will hurt its business in the long-term.
Meanwhile, Ocado’s retail business continued doing well. Its revenue jumped by 16% to over £1.5 billion, while its EBITDA jumped by 12% to £33 million. This growth happened as the number of customer orders jumped by nearly 15%, with third-party data showing that it was the fastest-growing UK retailer for 12 consecutive quarters. Its active customers rose to over 1.15 million.
Ocado share price technical analysis
OCDO stock chart | Source: TradingView
The weekly timeframe chart shows that the OCDO stock price has been in a strong downward trend in the past few years.
It crashed to a low of 167p, much lower than the all-time high of close to 3,000p. The stock has formed a falling wedge pattern, which is made up of two descending and converging trendlines. This pattern is one of the most common bullish reversal signs in technical analysis.
The Relative Strength Index (RSI) indicator has moved upwards and formed an ascending channel. Also, the two lines of the Percentage Price Oscillator (PPO) have made a bullish crossover.
Therefore, the stock will likely rebound in the near term, potentially to the psychological level at 300p. A move above that level will point to more gains to 385p, its highest level in August last year.
On the other hand, a drop below the key support level at 167p, the lower side of the wedge will point to more downside in the near term.
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