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Added at 755p
gla dyor etc
Pokerchips:
"The net proceeds of the Capital Raise is expected to give Ocado Group enough liquidity to fund the requirements of its existing and expected customer commitments into the mid-term, with no additional Group financing expected as the business becomes cash flow positive."
This seems to be all about staying afloat ("existing ... commitments"). "Expected customer commitments" and the fact that cash flow positive isn't going to be achieved for several years reveals the speculative nature of the stated reason for this raise.
It can take time for the fallout from the placement to settle. I would expect most of the dilution to be absorbed soon. Stability probably not far away until the next fund raising round of course.
@pokerchips,
A takeover of Ocado in the current economic climate is highly improbable imo. There have been no new customers to Ocado solutions this year apart from the existing Auchan partnership expanding by one CFC in Poland.
This market downtown is sharp and based on solid negative factors that have been previously discussed here. It's not just some Americans trying to short UK plc. It's very understandable though to short UK plc, it is very weak currently and will become more so...
Valueplay
I think what we are seeing within UK PLC is that the likes of the Americans are shorting UK shares and battering down share prices - but with the aim of taking a larger % of the shares for the future - to primarily own more of the UK PLC
UK funds and private investors are fearful of the short term and some are selling due to having to meet certain criteria etc
Valueplay
there are always two sides to a coin so you can look at the placing in different ways
You are right with one side of the coin in terms of cost pressures at present
You could also see it has negotiations between potential new customers has moved forwards ( these things take a long time to progress to contract) and the company sees expansion happening quicker than anticipated and they have to progress faster - fund "expected customer commitments into the mid-term" - mid term is normally 3-4 years time
Investors paid a high price for the last placing and a low price for this placing - swings and roundabouts - the dilution affect was very manageable though
The company has also shielded itself from any takeover approaches by ensuring its cash flow and cash liquidity is strong for the foreseeable future
For me current macroeconomic conditions, to the great detriment of Ocado, are worsening. Nows the time to be out of this stock ahead of further falls.
As always best of luck with your investments.
Valuplay
OK, lets see what happens now - clearly the current problems will take some time to resolve themselves.
To me, its still all about being patient.
Chilting,
My reason for selling was purely derived from the extreme nature of the macroeconomic headwinds facing Ocado currently. These conditions are worsening and Ocado is not a stock to be invested in currently. Repetitively falling Ocado retail sales. No new customers since the reimagined presentation. Fundraising occuring extremely early at a very low price indicating costs are rapidly escalating at Ocado group.
Investing in Ocado has been very lucrative for me but currently the best place to be is out of this share imo
Valueplay
I can see your reasoning for selling - that's obvious - but to be honest, you shouldn't have put yourself in a position where you felt you needed to sell - it all goes back to that discussion we had a couple of years ago about putting all your eggs in one basket.
@chilting
The placing went ahead yes but at a big discount and at a knockdown sp. Indicating the management believe the share price will not rise considerably in the short to medium term. Some of the management team took up shares in the placing, many others didn't.
Dropping sales at Ocado retail and rising costs at Ocado group are obviously sapping finances greatly but these issues were not mentioned in the placing RNS.
Chilting -
Ocado - 7% drop today versus an only a slightly down nasdaq.
That's very unstable...
As for the fund raise - Tim Steiner never seems to delay the inevitable and took the opportunity when he could.
Much better than waiting to go sometime in the future with all the market volatility.
And it was very successful.
Rubbish share really! It is F100.but never pays dividend!
One way down!
Guys,
At least the SP has stabilised and is now more or less following the market for tech shares - I can live with that.
My feeling is that the SP will just stay around this level with high volatility until the market improves - whenever that is.
Although we may not have seen the worst yet, I don't se OCDO performing any worst that other tech shares, including Amazon.
Bayobach, the market conditions for Ocado retail are extremely adverse. Ocado retail have already reduced their sales guidance twice this year. I expect another reduction in the coming months.
Ocados fundraise was far earlier than the market expected indicating the probability that costs are ramping up quickly at Ocado group. There were many issues surrounding the fundraise which I raised in an earlier post.
There will be further drops to this share price imo.
I don't care any more. I'm utterly sick of this share. I might as well donate the vestige of my investment to an animal charity, it might buy them a couple of tins of dog food.
...in the market:
https://invst.ly/yflwb
Pity OCDO had to slip below the red again! 780 anyone?