Ocado lost a fifth of its value yesterday, suffering its worst drop in 11 years after it was downgraded by a City broker.
The stock fell 19.9%, wiping nearly £1.4bn off the online supermarket group’s value – shaving £32m off the stake held by co-founder and chief executive Tim Steiner.
Ocado was among the lockdown winners thanks to its online business model, with its share price hitting a record 2895p in September 2020.
But it dropped as low as 343p in June this year.
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The stock recently went up in price and was trading for more than 800 pence before it dropped yesterday.
In his note, BNP Paribas Exane analyst Andrew Gwynn downgraded his recommendation to ‘underperform’ from ‘neutral’, explaining that the recent lift had left the risk-versus-reward ‘out of kilter’. The note added the stock ‘seems now to be out of kilter again’.
At the start of this week, Ocado sales jumped 7.2% in its third quarter as it returned to volume growth last month after the launch of its big price cut campaign.
The business had been under pressure to improve performance after Archie Norman, the chair of joint venture partner M&S told shareholders he was “not happy” with its performance at its AGM in July.
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