How to buy, sell and short Ocado shares

How to buy or invest in Ocado shares

‘Investing’ in Ocado shares means that you’ll be taking direct ownership of them. This’ll make you a company shareholder, so you’ll be eligible to receive dividends and have voting rights in company decisions. But, at the time of writing (3 August 2020), Ocado hasn’t paid a dividend to its shareholders.

‘Buying’ Ocado shares means that you’ll be trading on the Ocado share price with financial derivatives like spread bets and CFDs, without taking ownership of the underlying shares. You can speculate on the Ocado share price rising by going long, or falling by going short. You’ll also be able to open a position with leverage, which will grant you full market exposure for an initial deposit.

How much would it cost to invest in Ocado?

Since Ocado is a UK company, you’ll receive our best commission on UK shares when investing in Ocado with us. Our best commission on UK shares is available to clients who opened three or more positions on their share dealing account in the previous month.

If investing isn’t for you, you can still speculate on the Ocado share price with spread bets and CFDs. Since these are financial derivatives, you’ll be able to:

• Get full exposure with a 20%-25% deposit on almost all of our tier-one shares¹
• Spread bet without paying tax on any profits²
• Hedge your positions with CFDs and offset losses against profits for tax purposes²

How to sell or short Ocado shares

‘Selling’ Ocado shares means that you’ll be reducing your investment position. You could do this for a number of reasons, including wanting to take a profit or to cut a loss. Selling your investment position will result in a profit if the sale price is above the price for which you initially bought the shares. You’d be at a loss if the share price fell below the price for which you bought them.

‘Shorting’ Ocado shares means that you’ll be profiting from a decrease in their value. You can go short with financial derivatives like spread bets and CFDs because these products enable you to take a position without owning the underlying shares.

Ocado’s live market prices

Ocado shares: the basics

Ocado is listed on the London Stock Exchange (LSE) under the OCDO ticker. The company is a constituent of the FTSE 100, and its chief executive officer (CEO) – Tim Steiner – is the highest paid FTSE 100 CEO, receiving over £58 million in financial year 2019.³

The company has performed well in 2020 as more people have turned to online grocery delivery instead of visiting supermarkets themselves during the coronavirus pandemic. You can see a screengrab from our trading platform below, showing Ocado’s share price movements from 1 January 2020 to 1 July 2020. As it shows, the Ocado share price has gained 59.27% during this timeframe.

For the second half (H2) of 2020, Ocado is looking to expand its technology business. The company is ending a 20-year relationship with Waitrose, and it will sell half of its current grocery business to Marks & Spencer in a deal that will take effect in September 2020.

It’s not unfair to say that the company’s technology business has been overshadowed by its wider-known reputation as an online supermarket. But, Ocado licenses its technology – including its automated warehouse space – out to some of its largest competitors around the globe including Morrisons, Groupe Casino, Coles and Kroger.

The shift towards technology that is expected in the coming years will likely impact the company’s share price. As a result, you should keep track of the Ocado share price up to and after this shift to capitalise on any market volatility.

What is Ocado’s business model?

Ocado’s business model is based on the delivery of groceries to customers’ front doors. Despite being considered by many to be a ‘supermarket’, Ocado has no physical shops in which customers can buy goods.

Instead, the company operates out of a number of warehouses where they store and sort groceries for home delivery. The company’s stated aim is to ‘change the way the world shops [by] continually creating a shopping experience that is easier and more efficient at every stage’ of the company’s development.

Looking ahead to the next steps of the Ocado business model, the company has sold half of its grocery business to Marks and Spencer in a deal that is set to take effect in September 2020.

After this, Ocado will attempt to shift more towards being a technology company – leasing out warehouse space and assisting other supermarkets with their online services, storage and distribution.

This means that there is dramatic space for growth in the Ocado business model, and time will tell just how successful the shift toward technology and away from groceries is.

Ocado key personnel: who manages the company?

There are 12 people on the board of directors at Ocado:

How to analyse Ocado’s share price

You’ll need to use both fundamental and technical analysis to analyse the Ocado share price.

Fundamental analysis is focused on the macroeconomic factors that could cause a company’s share price to rise or fall, such as company earnings, senior leadership changes or product changes.

Technical analysis is focused on price chart movements, using indicators and price action to attempt to determine what a share price might do in the future.

Popular fundamental metrics include a company’s price-to-earnings ratio (P/E ratio), its return on equity (ROE), and the relative dividend yield. Popular technical indicators include the parabolic SAR, moving averages, and the relative strength index.

Buying Ocado shares summed up

• Buying Ocado shares means that you’ll be speculating on the share price with derivatives like spread bets and CFDs
• Investing in Ocado shares means that you’re taking direct ownership of the shares
• Selling Ocado shares means that you’re selling shares that you already own
• Shorting Ocado shares means that you’re speculating on the price of Ocado shares falling
• To buy or short Ocado shares, you’ll need a trading account; to invest in or sell Ocado shares you’ll need a share dealing account

¹ Deposits on leveraged trades are 20-25% for 99.14% of tier-one shares (correct as of 1 June 2020). For more information, view our share trading margin rates.
² Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
³ Pay Check, 2020