Ocado Shares Surge But Stock Set to Drop Out of FTSE 100

Ocado (LON: OCDO) shares jumped more than 9% Tuesday, adding to its more than 6% gain on Friday, but after six years, the company is set to drop out of the FTSE 100.

The share price surged over the last couple of sessions, with reports stating it was boosted by news last week that it had struck a deal with Turkish delivery business Getir to access its former UK customers.

Ocado has reportedly been sending promotional messages to former Getir users. Getir is backing out of the UK market. Ocado is said to have offered discounts to former Getir and Gorillas customers after striking a deal with Getir to send communications to its users encouraging them to switch to its rapid delivery service Zoom.

In addition, on Friday, JPMorgan raised its target for the stock to 450p from 350p, although it kept a Neutral rating on the shares.

Despite the positives over the last few days, Ocado looks set to drop out of London's blue-chip index.

Global index provider FTSE Russell said the company is poised to exit the index when the latest reshuffle occurs in June. The changes will be based on closing stock prices on Tuesday next week.

Despite rising over the last couple of sessions, Ocado's shares have plummeted from their 2020 and 2021 highs of over 2,800p. They now sit around the 400p mark. At its pandemic highs, the retailer's valuation was around £22 billion. As of May 28, it was £3.6 billion.

Darktrace looks set to replace Ocado in the index. In order to avoid relegation from the FTSE 100, Ocado would need to rise to around 500p between now and 4 June and see its current £3.4 billion valuation move above Darktrace’s £4.1 billion.