Days after the Financial Services Authority fined Sir Ken Morrison £210,000 for failing to declare a massive stake sell-off in the supermarket he founded, Ocado was hit on Friday by news that its co-founder’s wife sold a stake shortly before the share price crashed to an all-time low.
Jonathan Faiman, whose wife’s trust sold the shares, may have left in 2008 but the timing of the decision to sell is terrible coming just two days before joint in-house broker Goldman Sachs issued a downgrade.
The news tops off a dreadful week for Ocado as if the crash in its share price to a new low of 116p were not enough. These stormy times for the stock market have sent investors running for the cover of defensive stocks and Ocado is certainly not among them.
That does not mean the Ocado business model is doomed. Online grocery continues to grow in popularity and with Waitrose struggling to get its website in good working order, prospects are good for Ocado so long as it can keep up with demand.
And remember that Goldman downgraded its six-month target to 225p - nearly double the current price.