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Some things are easy to put a value on, but others are more difficult. I put the Ocado (LSE: OCDO) share price strongly in recent session.
Ocado came to market with its initial public offering (IPO) back in 2010.
I expect that those who bought the shares then expected to see some sustainable gains now. But they will be disappointed, with continued annual losses on forecasters' cards at least until 2026.
Boom and bust
And just look at what happened to the share price. It went through the roof and approached £30 in 2020 and 2021. But at the time, investors were walking away as if Covid had killed bricks and mortar stores, and Ocado was about to sew up the entire grocery business.
Of course, nothing of the sort happened, and the price went down again. At the time of writing, it is at 439p, and the stock is low FTSE 250.
What's next?
But with all this doom and gloom, what will happen to Ocado's share price at the end of 2024?
City analysts are equally divided on the question, even less so.
But, you know, I wonder if it might be time to protest?
I think it's fair to say that the pandemic and its aftermath helped throw off Ocado's plans. But now that we have passed, we should have a clear idea of how the long-term business of online stores may go.
Customer base
With H1 results on 16 July, CEO Tim Steiner revealed that Ocado is already supporting “Thirteen of the world's leading grocers are growing their business online with our technology“.
And talking about returning to its long-term location, he added: “The global channel shift to online has now resumed and Ocado is well positioned to capitalize on this opportunity.”
The financial base may not make for good reading, but I can say that it is actually better than it looks. We are still looking at losses, but they are decreasing. In the first half of this year it lost £154m before tax, almost half the £290m it recorded last year.
I expect Ocado's share price to remain volatile for some time yet. So I would say that there is a high risk of short term loss.
Profit forecast?
Consumers see Ocado's profits growing steadily over the next few years. And EBITDA is positive and looks set to grow well, with significant losses continuing to decline.
There's one thing I don't like, though, and I'm afraid it might throw the whole thing off. Interest payments are set to rise over the next few years. You need to look into that.
I think the first time we see a profit on the horizon for forecasters, Ocado's share price may just drop. If we see profit on the horizon the forecasters, ie.
However, with investors looking to risk growth again, I think Ocado could end 2024 earlier.
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