No, not birds falling out of the sky in Louisiana, but this…
… the recent share price performance of Webvan 2.0.
So what (if anything) can explain the move above and beyond the internet retailer’s 180p flotation price?
A bid approach from Wm Morrison? Highly unlikely.
What about strong trading over the key Christmas period? Possible. Waitrose, whose food Ocado sells online, did enjoy a strong Christmas. But surely the snow will have had an impact on trading, as Next noted in its own statement on Wednesday:
Directory initially benefited from the adverse weather conditions with people ordering from home rather than braving the cold. However, in the immediate run up to Christmas the fear of failed deliveries reduced demand. Overall we believe the effect of weather on Directory was neutral.
Which leaves us, ladies and gentlemen, with the rather dull answer of short squeeze. As the price has ticked higher more and more people have moved to cover their positions, sending the price higher — and forcing more people to cover, etc.
According to Data Explorers around 70 per cent of the Ocado shares available to borrow were on loan at the start of 2011.
Now, to put that figure into a little bit of perspective, based on average trading volumes that would take 109 days to cover!
So the squeeze could go on, even though Ocado is now hugely overvalued.
Update: 16.18 (GMT).
We have just talked to Data Explorers who note that there has been a big short position in Ocado for months now and there is no evidence that long only funds have been recalling stock. So, no short squeeze.
If anything they have been buying, reckons Data Explorer. Perhaps then, the real reason for the move is someone like Fidelity adding to its 13.2 per cent holding in a thin market (mixed in with a bit of short covering).
The mystery goes on.
Related links:
Scramble for Ocado ahead of update – FT
Ocado rises above float price for first time – Daily Telegraph
Double discount Ocado – FT Alphaville