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Ocado’s shares exceed float price for first time


Shares in online grocer Ocado finished trading yesterday above its IPO price for the first time since the retailer’s July flotation, in a busy day for the markets.

Its share price leapt 18.4p in one day, closing at 196.7p, the only day it has traded at beyond its initial price of 180p.

Ocado is widely regarded for its innovative product and service offer but is yet to make a profit and had to suddenly reduce its original share valuation down from 200-275p prior to the IPO following a lack of investment interest.

Matthew Piner, Senior Retail Analyst at Verdict Research, said: “With food retailers and online players seeing a rally in their share prices and strong numbers from Waitrose, Ocado has seen its own valuation increase by more than ten per cent.

“With continuing improvements to its website and service, Ocado continues to grow in both profile and popularity with consumers.

“However, until it finds a way to attain consistent profitability, its valuation will continue hitting a glass ceiling.”

At the time of flotation Ocado CEO Tim Steiner was bullish about the future prospects of the online grocer and he and his management team will hope that the company has started the year how it means to go on.

“Share prices are volatile. Did we get the valuation wrong? We will see in two years’ time,” Steiner said after the IPO.

“If someone offered me 275p for the business today I would not sell a single one of my shares.”

Overall the markets responded positively to the VAT rise introduced yesterday (January 4th), with the FTSE 100 experiencing its biggest gain in a month, up 113.93 points to 6013.87, whilst the FTSE 250 increased 163.76 points to 11722.56.

Published on Wednesday 05 January by Editorial Assistant

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