Ocado Share Leap Wipes Out $382 Million for Short Sellers

Ocado Share Leap Wipes Out $382 Million for Short Sellers

  • Stock surges 81% after Kroger deal, squeezing shorts
  • Company has 10% of shares out on loan, Markit data show

Kroger Partners With U.K.'s Ocado

Betting against Ocado Group Plc has just gotten even more painful.

The shares surged as much as 81 percent on Thursday, the most on record, after the online grocer announced an agreement to license its home-delivery technology to U.S. supermarket chain Kroger Co., which also includes Kroger buying a stake in the U.K. company. The surge wiped out as much as 282 million pounds ($382 million) from the paper value of speculators’ bearish bets, according to data compiled by Bloomberg and IHS Markit Ltd., while adding as much as about 2.8 billion pounds to the company’s market value.

Ocado has long been a target for short sellers, although bearish bets have been tapering since the U.K. company clinched a technology licensing deal with French supermarket operator Casino Guichard Perrachon SA in November. Short interest was at 10 percent of shares outstanding as of Wednesday, down from a record high of 24 percent in March 2016, according to IHS Markit data.

Some of those short sellers may have made a profit on their bearish Ocado trades before Thursday, as the stock had fallen about 7.6 percent from this year’s peak in March through to Wednesday’s close.