This year has been volatile and unpredictable for shareholders of Ocado Group (LSE: OCDO). The Ocado share price soared in early 2021, before coming crashing back down with a bang as the year unfolded. As a result, Ocado shares have been the very worst performer in the FTSE 100 index over the past 12 months.
The Ocado share price soars and surges
At the end of 2019, the Ocado share price closed at 1,279p. However, during the early stages of the Covid-19 pandemic, OCDO slumped along with the wider stock market. At its 2020 intra-day low, the stock dived as low as 994.01p on 12 March 2020, before rebounding to close at 1,077p. To be honest, I’d have been a keen buyer of this go-go growth stock below £10, but I missed this buying opportunity at the time, sadly.
As the UK stock market spluttered back to life, the Ocado share price took off like a SpaceX rocket. On 30 September 2020, OCDO hit its all-time high of 2,914p, before easing back to close at 2,744p. Thus, this stock had almost tripled (+193.2%) from 2020’s low to high. Wow.
The Ocado share price then went on to end 2020 at 2,287p, gaining more than £10 a share in 2020. That’s a delightful return of 78.8% over 12 months, absolutely thrashing the wider FTSE 100. But the shares then took off again, surging to even greater heights this January. On 27 January, the Ocado share price hit its 2021 closing high of 2,883p. Then the stock leapt to an intra-day high of 2,888p on 3 February, before closing at 2,846p. What a fantastic start to the year for Ocado shareholders.
Ocado falls back down to earth
Unfortunately, what goes up often comes down in the stock market, just as it does in the physical world. On 28 January 2021, as the Ocado share price approached its 2021 peak, I gave this superstar stock a big thumbs-down. Back then, I noted, “At the current share price of 2,854p, Ocado is valued at £21.4bn. That’s over 12 times its 2019 revenues”. I also warned that, after rising more than a quarter (+28.8%) in 30 days, “Ocado looks [to me] like a bubble waiting to burst.”
At the time, my main concern was that the Ocado share price had gotten too far ahead of the online supermarket’s underlying performance. After all, Ocado has made a decade of losses since its flotation in mid-2010. To fuel its rapid growth in revenues, the group burns through cash, generating substantial yearly losses. And my forecast certainly proved correct. As I write on Tuesday afternoon, Ocado trades at 1,808p, down 87p (-4.6%) today. Thus, the former super-stock is down 19.4% over 12 months, making it the worst performer in the FTSE 100 over one year.
What next for Ocado in 2022?
Having fallen £10.80 from its year high, the Ocado share price has lost 20.9% in 2021. And, for the record, the stock is down a whopping 37.4% from its 3 February high. Ouch. However, I am reasonably sure that 2022 will be a better year than 2021 for Ocado shareholders. After all, the shares have taken a steep dive over the past 10 months — a drop unlikely to be repeated next year. That said, I don’t own Ocado shares today and would not be tempted to buy at current levels. Instead, I’d rather sit back and wait for the group’s latest trading statement on 14 December!
Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended Ocado Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.
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