By Geoffrey Smith
Investing.com -- Ocado (LON:OCDO) stock fell nearly 5% at the open in London on Tuesday after a raising 575 million pounds ($707 million) through a discounted share sale late on Monday.
The maker of warehousing technology said it sold 72.3 million shares, raising its capital base by just under 10%. The placement price was 795 pence, some 9.4% below the stock’s Monday closing level.
Ocado was a major beneficiary of the pandemic’s tendency to accelerate the trend to online shopping. However, its stock has fallen 50% from its COVID-era peak in recent months, affected by the worldwide sell-off in technology shares. That selloff has particularly hurt tech stocks which are still in an early stage of their growth and consequently unprofitable. Ocado's share price has fallen over 70% from its 2020 peak but still trades at more than double its annual sales.
The company, which runs a grocery joint venture with Marks & Spencer (OTC:MAKSY) in the U.K. and is a major technology supplier to Kroger (NYSE:KR) in the U.S., said it needs the money to help fund its expansion over the coming years.
As part of the capital raise, Ocado also agreed a new 300 million pound revolving credit facility with its lenders. The company said on Monday the funds raised will give it "enough liquidity to fund the requirements of its existing and expected customer commitments into the midterm."