That’s right, at pixel time shares in the loss-making UK internet grocer Ocado were changing hands for 242p, giving it a market value of a cool £1.2bn.
We think the most recent spike has been caused by short covering, as these charts from Data Explorers show.
The first shows the amount of long supply as a percentage of Ocado shares outstanding and the second the amount of borrowable stock on loan.
Long supply up:
Utilisation down. :
But not everyone agrees. Some brokers believe a bidder is sniffing around Webvan 2.0.
This email has been whizzing round the City of London on Monday morning:
OCDO LN is the story that nobody wants to admit. – Ask any mkt person and they dismiss it as short squeeze. – Ask any retail person & they say either Asda or MRW need/want to buy it to stem Tesco’s amazing advance into the online delivery business. – FT highlights stake building, but no names. – Fact is, John Lewis Pension can now sell their 11% stake (180 day lockup period has expired) & the growth of Waitrose Direct means that their holding is a slight contradiction to their operational aims. – The Sell side clearly misunderstands this stock, ’6 sells’ vs ’5 buys’, but Ocado should not be judged in the retail peer group, especially as its supply is so reliant on the majors. With a major, its simply a marvelous bolt on opportunity & with MRW’s network in the Midlands and North, to further grow sales by not opening a shop!
We’re not convinced and will be sticking with the short-selling explanation.
Ocado is due to file preliminary results a week on Tuesday.
Related links:
Great mysteries of our time – FT Alphaville