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I wish I could share this optimism. However, as per an earlier post of mine here I am worried that Ocado could face a liquidity crisis in the next two years if it continues to fail to make a net profit. This is very important to remember.
The company burns through a lot of cash and even though it has over £800m of cash on its balance sheet (as of 3rd Dec 2023), it will likely experience liquidity problems by the end of 2025 if it fails to generate a positive net profit by that time.
The company also has £1,459.5m of borrowings as of 3rd Dec 2023 with the majority of these in the form of convertible bonds with maturity dates from 2025-27.
I fear that at some point in the not too distant future, the company will either have to increase it's borrowings on unfavourable terms or raise more money via a placing at potentially a lower share price than the current one, which could be pretty dilutive.
I am also unhappy by the grotesquely excessive amount of money Tim Steiner has been paid over the years. This is absolutely insulting for a company that has still failed to make a positive net profit. I am not against big pay packages. Tim Cook at Apple gets paid a lot but he is worth it since Apple is quite simply a cash machine generating beast of a company. Ocado isn't.
If it wasn't for these risks then I would agree that the current share price is a bargain.
I wish I could share this optimism. However, as per an earlier post of mine here I am worried that Ocado could face a liquidity crisis in the next two years if it continues to fail to make a net profit. This is very important to remember.
The company burns through a lot of cash and even though it has over £800m of cash on its balance sheet (as of 3rd Dec 2023), it will likely experience liquidity problems by the end of 2025 if it fails to generate a positive net profit by that time.
The company also has £1,459.5m of borrowings as of 3rd Dec 2023 with the majority of these in the form of convertible bonds with maturity dates from 2025-27.
I fear that at some point in the not too distant future, the company will either have to increase it's borrowings on unfavourable terms or raise more money via a placing at potentially a lower share price than the current one, which could be pretty dilutive.
I am also unhappy by the grotesquely excessive amount of money Tim Steiner has been paid over the years. This is absolutely insulting for a company that has still failed to make a positive net profit. I am not against big pay packages. Tim Cook at Apple gets paid a lot but he is worth it since Apple is quite simply a cash machine generating beast of a company. Ocado isn't.
If it wasn't for these risks then I would agree that the current share price is a bargain.
I repeat what I said the other day here. Shorters are on thin ice. Takeover target, move to NASDAQ, new contract wins (Nike rumoured), general growth into non retail markets, interest rates past their peak, EBITDA heading in the right direction...and a few other good reasons why the SP should tick upwards. I am all in favour of a move to the US market because they need to distance themselves from UK where people vjew then as a supermarket. Huge potential market for Ocado.
Same here. I get that most here are only interested in 5/10% swings. I invested in the only mainstream publicly traded tech company in the UK because I want to go along for the ride.
I was invested in Tesla a few years back when all of the dominant narrative was that they were a garbage company that would never be able to make any profit.
Every day there were negative stories in the press magnifying minor issues. It's quite easy for short sellers to plant stories in the press. As happened with NatWest a few months back.
I don't think Ocado is another Tesla but I do believe there is value here that is not reflected in the SP. Some of this is down to the moribund UK market, which seems to be in it's death throes.
Lack of liquidity is the issue, hence the constant spikes up and down on share trades of £1m or so.
So that's why the Nasdaq move makes sense and the decision to drop reporting of Ocado Retail seems like a step towards simplifying the investment case.
As an investor and not a trader I am confident that the SP will re-rate. Key rationale for me:-
The SP has dropped from £30ish down to just one tenth of that in a couple of years. Ocado have more clients, the technology is more mature and their revenue is up over the last couple of years from that point.
The current SP means that Ocado is ripe for a takeover bid.
The executive should be looking at a transition to the States where leading edge technology solutions are much more favoured, hopefully we hear positive action on that at the AGM next week.
AI is the future there is no two ways about it. Ocado have a leading edge AI solution.
The longer the hedge funds have shorts in play the more interest they pay and they will have targets and margin calls versus their longs and for me it must be close to the point where they start to exit.
The M&S stand off regarding the rebate must be resolved give they are in partnership or M&S could look at acquiring Ocado's stake.
In summary a takeover approach, M&S resolution of the rebate and/or move to the States for me means the potential for a big re-rate is high. GLA.