Could Ocado's shares surge on new coronavirus strain?

By John Reynolds on Monday 29 November 2021

Could Ocado's shares surge on new coronavirus strain?
Image source: Could Ocado's shares surge on new coronavirus strain?
CommentaryFood DeliveryGrocery DeliveryRetail Delivery

Shares in Ocado were down 6.8 per cent this week to 1,776p, also down were DoorDash, down 14.5 per cent, as were Just Eat Takeaway, down 5.5 per cent.

Shares in Ocado were down 6.8 per cent in the week to 1,776.00p but nudged up on Friday amid concern about the new virulent coronavirus strain, according to the Future Food Finance FoodTech Index.

The introduction of new restrictions, which could include advice to work from home if the NHS comes under “unsustainable pressure", would likely spell good news for Ocado and other online grocers.

After the first lockdown in 2020, Ocado shares rose by 150 per cent after the FTSE 100 grocer reported a strong rise in sales in 2020.

Ocado's shares are still up around a third on pre-pandemic levels.

Meanwhile, shares in DoorDash were down 14.5 per cent to $187.92, according to the index.

This follows DoorDash announcing it was paying out more than $5 million to settle a probe by the city of San Francisco into alleged labour law violations, with the majority of the money going to delivery workers.

In total, around $5.1 million will go to the nearly 4,500 DoorDash workers who completed deliveries in San Francisco between 2016 and 2020.

As part of the settlement, most drivers will get between $500 and $1,000.

"We are living through an era of deep inequality, and nothing could be more important than ensuring workers are paid fairly and their benefits are safeguarded," San Francisco City attorney David Chiu Chiu said in a statement.

DoorDash said: “While we deny any wrongdoing, we feel that this settlement represents a fair compromise that will allow us to focus on continuing to provide the best experience for Dashers."

The probe was launched in 2019 after reports that DoorDash was subsidising workers' base pay with customer tips.

San Francisco said the delivery firm was transgressing the city’s health care benefit and paid sick leave laws by not classing workers as employees, instead classifying them as contractors.

DoorDash maintains its workers should be classified as independent contractors.

Meanwhile, an article in The Motley Fool raised the question of whether DoorDash is a buy among food delivery stock following its purchase of Wolt.

The article said: “The answer is probably found in something impossible to quantify directly: traders' general liking for the stock. Short-term sentiment likes DoorDash and dislikes Just Eat, meaning that DoorDash is arguably a better buy.

“DoorDash's Wolt acquisition is bullish because Wall Street valued it favorably, even though it's very similar to Just Eat's Grubhub acquisition, which Wall Street valued negatively because of its feeling about Grubhub.

“Buying Wolt should give DoorDash several quarters of flashy revenue-growth news with which to reinforce Wall Street's current optimism. It will also probably be strongly accretive to the bottom line if DoorDash solves the scaling problem.

"These facts could prolong DoorDash's bull run well into 2022, and maybe into 2023. Its long-term fate is extremely uncertain, and buying Wolt won't change that, but if you're seeking short-term gains, it looks like a potentially viable food delivery stock."

Finally, shares in Just Eat Takeaway were down 5.5 per cent to £187.92.