True, but as they didn't put up a campaign and left it to The Lib Dems, as well as the other factors I've said, it's not really a surprise. Look at it another way - they could only finish 3rd in that seat when they won a landslide in the 1997 General Election. I'd hazard a guess this morning they're about as bothered about the result/quietly pleased The Lib Dems won it and not The Tories, as they were then.
Why do you say they are quietly pleased the Lib Dems won it over the Tories? Who knows what Labour stand for? The LibDems are "Tory enablers" according to Corbyn apologists on here so not much difference there, but one difference is that they are anti Brexit whereas nobody knows what the Labour party position is on Brexit.
Perhaps if Labour had bothered campaigning rather than falling 2,000 votes behind a pressure group, their vote haul would at least have shown them what people actually think of them.