Ocado shares are tanking and hit a three-year low

Shares in Ocado, the online grocery retailer, are tumbling for the third day in a row in reaction to last week's launch of Amazon Fresh, a service some analysts have warned could cause erode Ocado's market share.

At 11:20 a.m. BST (6:15 a.m. ET) shares in the FTSE 250 listed retailer are off by 8.87% to around £2.04 each.

The shares have fallen by more than a third since the start of April and are at their lowest point since 2013.

On the day that Amazon Fresh launched last week, shares actually rose marginally, as analysts had largely priced in the launch.

But investors have become concerned at just how big a disruption Amazon's entry into the fresh food market could be, and are selling accordingly. A spokesman for Ocado declined to comment.

Here's how the stock looks over the past few years:

In a note circulated to clients on the day of the launch, US-based research firm Bernstein noted that given the upmarket standard of the food on offer with AmazonFresh, it is the likes of Ocado, as well as Sainsbury's, that will be worst hit by Amazon's move into groceries.

Here's an extract from Bernstein's report:

The entry of Amazon Fresh into the UK doesn't come out of the blue but it will further worry investors about the fundamentals and prospects of the UK food retail market. While we have written in great detail about the limits those offerings (amazon has tried for 17 years to develop Amazon Fresh in its home market of Seattle, with very little to show for it), that won't be the focus on investors in the short term.

Given the London focus and upmarket bias of the offer, we would expect Sainsbury's to be most impacted from an investor sentiment point of view. However Tesco, and Ocado (outside our coverage) have the largest London based online food retail and therefore will be exposed as well.