Death by a thousand cuts is the phrase that comes to mind when looking at the Ocado (LSE:OCDO) share price. It’s down 91% over the past five years, with 29% of that move coming in the past year. Fresh news out in February has caused another headache for investors. The question now is, what would it take to get the stock to rally?
Recent problems
The latest issue that has spooked some investors this month (February 2026) is the news that Ocado is cutting around 1,000 jobs globally. In some ways, this shouldn’t surprise people. The company has been shedding jobs over the past year as it seeks to cut costs across the board. However, ahead of the full-year results due out at the end of the month, it isn’t a great sign for investors. If anything, it shows that the company needs to cut even more aggressively to try and get finances under control.
If we take a step back, one of the core problems that has always put me off investing in the business (regardless of how cheap the stock might look) is the lack of profitability. The company has simply been losing money year after year. It generates billions in revenue but still makes losses. There comes a point where investors want profits, not just future growth stories.
Finally, late last year the news broke that Kroger (Ocado’s biggest international partner) was closing three automated warehouses. This has caused doubts about future US expansion for Ocado, on top of the loss of around £37m in recurring revenue.
Catalysts for a rally
Logic tells me that if Ocado doesn’t go bust, the share price can’t fall forever. Intrinsically, there’s value in the company. Yet for people to believe that this value could increase, something needs to happen.
One catalyst would be the signing of a new global partner. These are lumpy and significant deals, which not only would provide a material long-term boost to revenue but also offer credibility with a suggestion that the business model and tech platform works.
Another factor could be a continued fall in inflation, helping to boost profit margins for the grocery division. Data released earlier this month showed January price inflation was 4%. This was a drop from the 4.3% reading from December and the lowest level since April 2025. If this trend keeps going, it could help Ocado to get closer to posting a profit, even if revenue stays the same.
Tough to be optimistic
But even with potential positive signs, I struggle to see any reason right now to make me want to buy the stock. Just because the share price is heavily depressed doesn’t mean it’s definitely undervalued. If anything, there’s a strong argument to be made that it’s fairly valued, given the associated problems.
If we do see some event trigger a move higher, then I’d evaluate it to see if it changes the outlook, but until that time, I’m going to steer clear.
