Shares in online grocer Ocado Group (LSE: OCDO) are among the most volatile in the entire FTSE 100 index. Indeed, the Ocado share price has moved by more than 5% daily in 54 trading days in 2023 so far.
What’s more, this widely traded share has moved up or down by 10% and more fairly often. In short, owning Ocado stock in 2023 has been like riding a roller coaster.
The Ocado share price goes wild
At its 52-week high on 4 August 2022, this stock briefly hit 989.6p a share. But then it crashed spectacularly, bottoming out at a low of 342p on 6 June.
As I write, the share price stands at 507.6p, valuing the group at £4.2bn. Here’s how this stormy stock has performed over seven different periods:
| One day | -9.0% |
| Five days | +14.8% |
| One month | +29.5% |
| Year to date | -17.9% |
| Six months | -18.6% |
| One year | -41.2% |
| Five years | -50.6% |
Looking at this table, I imagine that Ocado shareholders must need nerves of steel to own this stock. Despite leaping by almost 30% in the past month, the share price has crashed by more than two-fifths over one year and have halved over five years.
But what sent this stock soaring from its lows earlier this month?
My uncanny prediction
in an article published on 6 June — the very day that the Ocado share price hit rock-bottom — I made an eerily prescient remark asking, “At under 345p, are Ocado shares London’s biggest bargain?”
Arguing that there must be some value in these shares, I mused that the best result for Ocado’s owners would be a takeover bid for the entire business.
Within days of this, on 22 June, rumours of a takeover approach for Ocado by Amazon.com sent its shares soaring skywards. This bid speculation sent the share price to an intra-day high of 631.8p, up almost 47% overnight. However, it then eased back to close at 567.8p.
As often happens, both companies denied the existence of any firm offer on the table, hence the stock’s subsequent slide. But having made a loss in every year of its 23-year existence, I regard Ocado’s proprietary logistics technology as probably its most-prized asset to prospective bidders.
Would I buy Ocado shares today?
As a long-term value investor, I prefer to buy into established companies with rising revenues, earnings, and dividends. While Ocado has plenty of the first category, it is loss-making and has never paid a dividend.
Also, as an older investor (I’m 55), I prefer steady-Eddie yearly gains than sudden, explosive spikes in share prices. In short, Ocado stock is far too volatile and risky for my blood, so it’s not for me. But I’m sure that many ‘adrenaline junkies’ are buying these shares for the thrill of this roller-coaster ride!