Ocado shares tumble after its flotation
OCADO’S share price tumbled yesterday as investors gave the thumbs down to its stock, even at its massively reduced valuation.
Shares in the firm – which floated at 180p – were selling as low as 155p during its first morning of conditional trading.
Analysts queued up to take a pop at the firm, with some warning hedge funds are likely to short the stock.
Chief executive Tim Steiner was forced to defend the firm during a terse briefing, saying: “Shares are volatile in the short term. The market is entitled to its view. Some hedge funds may try their luck. We’ll see in two years.
“People are missing things about Ocado. They are looking in the rear view mirror. In ten
years’ time we will be in the future, not the past.”
Steiner said the firm reduced its price from 200-275p to 180-200p, a reduction of 23 per
cent, in order to attract a higher percentage of high quality investors who would benefit the firm in the long-term. The firm scraped the flotation at the lower end of the lower value. It valued the online grocer at £937m, including the £200m of new equity raised.
Steiner also attacked the analysts who claimed the price was too high, saying there were people “very happy to see their name in print.”
Steiner said he chose not to sell any of his shares, and claimed he would still have held onto his stock at a price of 275p.
The management team, including the Employee Benefit Trust, now own around 15 per cent of the firm. The John Lewis Pension Fund reduced its holding to 10.36 per cent.
Steiner said investors were 40 per cent from the UK, 30 per cent from the EU and 30 per cent from the US.
Collins Stewart subsidiary Quest released a revised target price of 122p, adding: “We maintain our negative stance on the stock with our sell.”