Ocado shares tanked because of this worrying revelation from Amazon UK's boss
Ocado shares tanked in Wednesday's trading session after investors started to abandon the stock on one piece of terrifying news.
And what's so worrying for investors in Ocado, which is an online grocery delivery group that also creates a whole heap of technology that it can sell to other businesses?
Chris North, the CEO of Amazon UK, said in an interview with The Guardian that Amazon Pantry is going to rapidly expand its range of products, despite only launching in November.
North's comments killed Ocado stock on Wednesday:
The stock fell by over 3% by market close, bringing the total fall year-to-date to -21.25%.
"Amazon Pantry" is the recently launched, limited-range grocery with around 4,000 items on offer - although this is now set to expand. Each box can hold up to 20 kg. Orders are £2.99 ($4.49) for the first box and 99p ($1.48) for subsequent boxes, and are available to Amazon Prime customers.
At the end of November, Credit Suisse analyst Stewart McGuire and his team published a research note saying that Ocado should just give up and sell the company to Amazon or Walmart.
Ocado has neither the balance sheet, brand, management depth, nor the mandate to expand internationally.
We were less troubled given the very modest success of AmazonFresh in the US market. However, Amazon Pantry is much more concerning, as it plays to Amazon's strengths and exploits the weaknesses of the existing home delivery model.