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The Ocado share price was the FTSE 100’s worst performer Thursday. Is the party over?

first_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. “This Stock Could Be Like Buying Amazon in 1997” Simply click below to discover how you can take advantage of this. Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Image source: Getty Images The Ocado share price was the FTSE 100’s worst performer Thursday. Is the party over? Enter Your Email Address Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!center_img Alan Oscroft | Friday, 11th December, 2020 | More on: OCDO I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. You know something might be wrong when your favourite growth share is the worst performer in the FTSE 100. And that’s exactly what happened to Ocado Group (LSE: OCDO) Thursday. Well, not that it’s actually my favourite growth share, but you know what I mean. The Ocado share price ended the day losing a fraction over 7%. So what happened?The obvious suspect is Thursday’s Q4 trading update from Ocado Retail, the joint venture formed between Ocado Group and Marks & Spencer.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…The only thing is, the valuation of Ocado shares is not remotely based on current trading. No, we’re looking at a company whose last positive year-end P/E figure stood at more than 250. That was in 2016, and we’ve seen increasing annual losses since then.These are impressive lockdown resultsAnyway, what did the update say? And what light can it cast on the mini-slump in the Ocado share price? The figures looked good. And Ocado Group upped its full-year guidance for the third time this year, indicating EBITDA of over £70m.Retail revenue for the quarter is up 35%, with average orders per week up 3%. We can’t really tell what that means for the long term, mind. Revenue has been significantly boosted by the pandemic, and what a normalised week will look like is something we’ll have to wait and see. But it does at least suggest shoppers do like the tie-up with M&S. The two increasingly look like a good match.What’s driving the Ocado share price?None of this helps me make sense of the Ocado share price, or why it fell on such positive figures. Maybe investors are finally latching on to the comparative valuations of Ocado and competitors like Tesco.According to the latest Kantar figures, Ocado accounts for a mere 1.7% of the UK groceries market. And the valuation of the company? Ocado’s market capitalisation stands at a rather blinding £16bn. Tesco, meanwhile, is valued at £22.5bn, or 40% higher. That’s with Tesco commanding a massive 27% of the market, more than 15 times Ocado’s share.So perhaps people are actually starting to see Ocado more as an online supermarket, and less as a jam-tomorrow shopping technology company. The latter is a key part of whatever attraction the Ocado share price has. And I do think there’s plenty of potential there.Where’s the technology going?If anyone wants in on the online market, Ocado has the whole package of logistics, software, the lot. And it’s landed some impressive contracts around the world. But when is that arm of the business going to start bringing in the fat profits? And, in fact, will it ever do so?Those are big questions, and nobody really has any clue about the answers. Meanwhile, Ocado shares have been boosted to levels that I think include way more optimism than is justified.One day, I think the Ocado share price will inevitably come to reflect the actual value of the company’s income stream. And that, I fear, will require a big downrating. It’s bargepole time for me. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Our 6 ‘Best Buys Now’ Shares See all posts by Alan Oscroftlast_img read more