Ocado shares fell 4.7% to 835.6p in late morning trading on Tuesday after the online retailer raised £578 million from placing 72.3 million shares at a 9% discount of 795p to Monday’s closing traded price of 877.6p in a move to fund its technology business.
The company invited investors to subscribe to the fundraise through the PrimaryBid platform for 246,405 shares in total, alongside an additional £3 million raised from management executives including CEO Tim Steiner, who acquired 125,786 new ordinary shares.
Ocado also reported it had agreed a £300 million revolving credit facility as it worked to boost its faltering businesses.
Investors dropped the stock as shareholders divided on Ocado’s plans to enhance its tech sector, while analysts noted the split perspective on the market today.
“Ocado remains a jam tomorrow story, with the company having greased its baking trays by means of winning numerous contracts with third party grocery sellers,” said AJ Bell investment director Russ Mould.
“The next stage is to fill these trays with the right ingredients to support their online grocery operations, and that’s where all the extra money is needed alongside making improvements to its systems.”
“While there remains excitement about the online grocery space, Ocado can’t keep burning through cash indefinitely. At some point soon it will have to start generating profits and making money, as that’s been the missing component with its story so far.”
Ocado has been struggling in a post-pandemic environment, and shareholders are evidently cynical about the retailer’s longer-term prospects and its potential to spin gold from its stack of retail straw.