Ocado's investors are still waiting for a game changer

The online supermarket's sales have soared again, but its share price slipped 6% this morning. Tick tock.

by Jack Torrance

On the face of it, this morning’s trading update from Ocado looks like good news. The online supermarket’s group sales were up by 15% in the 16 weeks to November 29, its thirteenth consecutive quarter of double-digit growth.

Compared to its bricks and mortar competitors (particularly Tesco, Sainsbury’s, Asda and Morrisons), Ocado is holding up very well, and its CEO and co-founder Tim Steiner said he expects sales to continue growing ahead of the wider online grocery market.

It seems investors don’t share his upbeat outlook, though. Ocado’s share price slipped 6% this morning to 335.7p, well down from the 470.8p annual peak it hit back in July. With a market cap of around £2bn (more than 50% that of Morrisons, which had 16 times more revenues in 2014) and a price/earnings ratio of around 300, there’s little wonder investors have high expectations.

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