Ocado is on the verge of dropping from the FTSE 100 after a prolonged session of declines in its share prices

This evening Ocado came close to being dropped from the FTSE 100, the latest blow to investors who have already seen a 90% decline in the value of their shares over the last four years.

The ongoing crisis also comes amid threats of legal action with its joint venture partner Marks and Spencer. That put more pressure on shares and embattled Ocado boss Tim Steiner amid controversy over high pay and a five-year package worth up to £100m.

Ocado’s impending demotion to the FTSE 250 will end its six-year stay among Britain’s biggest companies amid concern over Steiner’s stake in the company he founded. The former Goldman Sachs banker earned £59m in 2020, around the peak of the share price.

In 2022, almost 30% of shareholders voted against the CEO’s £100m five-year remuneration plan. This proposal came even as hopes were fading that Ocado’s robotic warehouses would become the British answer to the world’s biggest names in e-commerce.

The company, which also provides e-commerce technology to well-known retailers around the world, has been haunted by doubts in the city about whether it will ever be able to consistently make money.

Clive Black, retail analyst at Shore Capital, asked how much “Ocado executives might actually be paying themselves if it made a profit at all”, pointing out that profitability would still be “five to six years” into the future, so as was the case “about ten or ten twelve years ago.”

The City celebrity added: “It’s a shame for the British Olympic team that corporate goal kicks won’t be included at the Paris Olympics in summer 2024 as one Steiner T would have taken the country gold.”

Ocado declined to comment for this article.

The company has state-of-the-art e-commerce warehouses and performs deliveries, but does not deliver the goods.

The threat to sue M&S – its partner and owner of a 50% stake in the Ocado Retail joint venture – centered on a £190 million payment that was contingent on meeting performance targets. The dispute deepened the sense of unease surrounding the company.

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Sources close to the company say its three-way structure – an Ocado Retail joint venture with M&S, Logistics and Technology Solutions – means it does not easily fit into the usual classifications used by City analysts, who may not fully understand it.

They also claim that even the harshest critics recognize that Ocado is innovative.

The company has gained some support in the square mile, where experts point to demand for its services from major retailers around the world.

Deutsche Numis Securities pointed out in a recent commentary that 13 “world’s leading retailers are Ocado partners”, adding:

“They represent over £250 billion in annual grocery sales. If 20% of this were to go online, supporting these sales would mean approximately £2.75 billion in annuity revenues.”

June changes to the FTSE 100 index will be announced by the London Stock Exchange after today’s close of session, based on market valuations made at yesterday’s close. Like Ocado, wealth manager St James’s Place is expected to fall on the FTSE 250 index.

Yesterday, the Ocado share price closed at 354p, down 29p or 7.6%. Today they fell slightly, to just over 353p.

ShoreCap’s Black said: “How the market values ​​Ocado’s capital as it stands… is both a mystery and a wonder to us.”