Ocado has seen its share price drop nearly 20 per cent this week after news broke that a coronavirus vaccine could be rolled out as early as December.
On Monday US pharmaceutical giant Pfizer, alongside its vaccine partner BioNTech, revealed that the COVID-19 vaccine they had been developing was 90 per cent effective at protecting people from the virus.
The news had a staggering impact on the stock market, seeing pharmaceutical companies’ share values skyrocket, while companies who have benefited from lockdown were hammered.
Ocado’s stocks, which have risen more than 150 per cent since March, dropped 17.03 per cent from 2596p per share to 2154p per share following the news.
This wiped nearly three billion of the company’s market capitalisation as investors feared that the vaccine would mean an end to the online grocery boom as shoppers would no longer be restricted to their homes.
In October, Ocado officially overtook the UK’s largest supermarket Tesco as the country’s most valuable supermarket, following a 51 per cent rise in sales over its latest quarter.
However, AJ Bell’s financial analyst Laith Khalaf believes its stock price has been overinflated during the pandemic, leading to a more dramatic drop in value this week.
“We know those share prices have been pumped up by the pandemic,” he said.
“When you get news like this the initial knee-jerk reaction in the markets does tend to over-exaggerate the reality on the ground.
“There are checks for it to go through. Companies like Ocado and the other food deliverers, perhaps will see a slight negative in terms of the pandemic coming to an end but even if we go back to pre-Covid types levels of activity, and I don’t believe we are anywhere near that yet, there is still residual benefit for those companies in terms of having reached that wider audience.”