This week our editors covered the full range, from the Great Depression to mental depression to Trump’s tariffs and Japanese anime characters.

What a trip!

But there’s one more story we could have covered. It comes from the Times, reporting on comments from chief executive of the Ocado Group (OCDO), Tim Steiner:

The City is wrong to “obsess” over short-term profitability, as tech companies burn cash in pursuit of scale, the boss of Ocado Group has said.

The online supermarket operator, which has been branded a “jam tomorrow” stock for its years of losses, has long been criticised for achieving a full-year pre-tax profit only once in its 25-year history.

Tim Steiner, co-founder and chief executive of the technology and grocery provider best known for its partnership with Marks & Spencer, said the market should take a longer view.

“Our shareholders should only have invested if they believe that in the long term we’re going to be a profitable business,” he said. “It’s right to have a focus but it can sometimes be wrong to overly obsess about it in the short term and not consider the long term.”

It’s funny. We seem to remember similar talk in the late 1990s and early 2000s. Forget about profit, it’s the growth that counts.

In the short term, we don’t necessarily disagree. On an individual company basis, it’s perfectly fine to focus on growth and fill the pipeline with future revenue. That’s OK.

Here’s the problem. Not every company that does that will make it far enough into the future in order to reap the rewards of the growth. During the original dot-com boom, we’ll guess barely one-in-100 fast growth companies made it. Some were big – much bigger than they should have been. Others were tiny.

As for Ocado, it has a £2.5 billion market cap. It’s not huge, but hardly tiny. And at what point should investors demand all that spending, growth, and ‘investment’ turn into profits? Surely that has to come one day – one year of pre-tax profit in 25 years isn’t a great record.

As for the stock price, based on the chart, we figure investors have suffered enough:

Source: Yahoo! Finance

Since 2010, the stock has been as high as £29.14. That was in 2020, during the Covid working-from-home and home-delivery boom. The stock price is currently £3.11.

Tim Steiner, the Ocado CEO says the market should take the long-term view. How long? How long should investors have to wait to make their money back on their investment? Everyone who has bought the stock since 2018 and still holds it, has lost money on it.

Investors haven’t even had the comfort of a dividend…although it’s kind of hard to pay a dividend when a company doesn’t make a profit.

Of course, bad companies, or seemingly bad companies can become good. But don’t hold your breath.

For the final word, we’ll leave that to another quote from the Times article:

Philip Dorgan, then an analyst at the broker Ambrian Partners, once quipped that “Ocado begins with an ‘o’, ends with an ‘o’ and is worth zero,” while Sir Terry Leahy, the former Tesco boss, dismissed it as little more than a “charity”, given its appetite for big losses.

Cheers,

Kris Sayce
Editor & Publisher, Investor’s Daily

P.S. Don’t fall for the misdirection. While everyone’s focused on tariffs, the real action is happening somewhere else entirely. Former CIA advisor Jim Rickards has a theory—and it could have massive implications for your money. See what he uncovered here.

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