Ocado (LON: OCDO) how has the dubious honour of being the London Stock Market's most shorted share. Going short is the practice of selling a share you don't own in order to buy it back at a lower price - you are assuming that the share price is going to decline. In order to do this you need to borrow the shares from a holder and pay them a fee. There is a register kept of which shares have been borrowed which then gives us our numbers for which is the most shorted stock.
Ocado has a borrow of 6.4% of the outstanding capital which is, clearly enough, higher than that of any other share in issue. Of course, that lots of people think the price is going to go down is not proof that it will. If everyone was certain that Ocado's price was going to decline then it would have declined already. But short interest does tell us how many think that decline is likely. It's also usually informed opinion that goes short - pension funds and retail investors not so much.
Ocado share price from London Stock Exchange
Clearly we'd like to have gone short a year back, or even 5 months back. But that's often not how these things work out. The short position often does build well after any share price peaks simply because sellers and shorts are working from the same information set.
What has been happening is that for a time Ocado was thought of as some wondrous new economy stock. The automated warehouses were going to be the new big thing in retail. Ocado would not be a warehouse operator of home shopping that is, but instead a supplier of automated warehouses to home shopping companies globally. That to put it politely, isn't quite how it has worked out.
Partly the results from a couple of years back were hugely flattered by lockdown. As that boost to online shopping retreated back to trend (the jump in online was there, but we've now gone back to where we would likely have been without lockdown acceleration), So Ocado is rather out of favour as it used to be in it.
This has not been helped by the latest set of accounts at OCDO. As analysts point out, Ocado profit before tax (or loss in fact) is about 25% worse than the market was expecting. Ocado's just not performing to expectations, no wonder people are short it.
