🥛 ​​Has Oatly’s Milk Curdled?

Delta's first profit in two years; Bank of America's miss.


Hey Global Investor! Here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Wednesday’s Close) 4,374.30 +5.09 (0.12%)

NASDAQ (Wednesday’s Close) 14,644.95 -32.70 (0.22%)

FTSE 100 (4:30 PM IST) 7,039.07 -52.12 (0.73%)

NIFTY 50 (Today’s Close) 15,924.20 +70.25 (0.44%)

USDINR (Today’s Close) 74.51 (1 Year -1.17%)


🔥 Top Movers

KRUS +23.15%
CMP +13.18%
AMEH +9.47%

GKOS -21.41%
RXRX -19.40%
UPWK -17.38%


🥛​​ Oatly: Has The Oat Milk Curdled?

Listen to this on Winvesta Podcast

An activist short seller has accused Swedish Oat Milk-maker Oatly (OTLY) of shady accounting practices and greenwashing. After a smashing IPO just two months ago, shares are now trading below the levels at which they debuted. Would investors be left crying over the spoilt milk? (Tweet This)

In The Face Of A Stinging Offence …

Howard Schultz. Oprah Winfrey. Natalie Portman. These are some of the powerful people Oatly counts among its investors. It’s not an overstatement if we say they’ve been very influential in their own spheres in encouraging action against climate change in the US.

Add to that list institutional investors such as Blackstone, and it gives Oatly, the Oat Milk-maker based in Sweden, the kind of heft other companies would give an arm and a leg for. When Oatly went for its IPO in late May, it caught the attention of retail investors. Its valuation shot through the roof to $13B, almost 6x its previous fundraise in 2020.

All this seems like eons ago. Oatly has suddenly awakened to a new reality.

Yesterday, Spruce Point Capital Management, an activist short seller, accused Oatly of misleading consumers and investors about its sustainability practices. The report accuses Oatly of overstating its revenue to investors. It points to the company’s recent investor presentation where its US revenues are alleged to be double of what they originally were.

Not only revenue, but Spruce Point has also accused Oatly of overstating its gross margins. Oatly does not include outbound shipping and handling costs in its calculations. Inclusion of all of these costs would mean that the company’s gross margin would be 6.4% lower than stated.

… Not Much Of A Defence!

Spruce Point has argued that the company has not been transparent with investors regarding accounting and auditing. Oatly has changed three auditors in the last six years, which was not disclosed in its filings when it went public.

The short seller has taken Oatly to task on losing market share in Sweden and the US due to a distinct lack of competitive advantage, rising input costs, and supply challenges created through poorly managed production facilities.

Spruce Point has taken the stance that if the status quo reigns supreme, Oatly will never achieve profitability. As such, the activist investor finds Oatly’s current valuation of 17x 2021 sales and 75x adjusted gross profit to be unsustainable.

To add insult to injury, it turns out Oatly’s New Jersey facility has also been out of compliance with the Environment Protection Agency. However, the EPA hasn’t outlined the specific issues. The plant is accused of using 55% more water for every liter of Oat base than its facilities in Sweden and The Netherlands.

Oatly’s defense was meek at best, terming the report as false and baseless and insisted it follows all the financial reporting rules. Other than noting that the short seller stands to financially benefit from a decline in the company’s stock price, there wasn’t much more forthcoming from the management. About 1% of Oatly’s float was shorted as of Tuesday.

Even before Spruce Point went public with its report, investors have been speaking with their legs. The stock is down nearly 30% from its peak of $28.75 a month ago. The short seller expects up to 70% further slide in the shares in light of the lofty targets baked into the current valuation.

Until the company clears the air on these serious allegations, it seems Oatly’s milk will stay curdled. Investors appear to have taken a stance already since the company share price is now below the level where it debuted during its much-awaited IPO back in May.

Market Reaction
OTLY ended at $20.54, down 2.79%.

Company Snapshot 📈

OTLY $20.54 -0.59 (-2.79%)

Analyst Ratings (15 Analysts) BUY 60%  HOLD 40%  SELL 0%


Newsworthy 📰

Two Years Hence: Delta posts first profit since 2019 thanks to federal aid, recovering revenue (DAL -1.57%)

Growth: BlackRock profit beats as assets grow to a record $9.5T (BLK -3.06%)

Underperformance: Bank of America shares fall after low interest rates squeeze second-quarter revenue (BAC -2.51%)


Later Today 🕒

  • UnitedHealth Group Inc. Earnings (UNH)
  • Morgan Stanley Earnings (MS)
  • US Bancorp Earnings (USB)
  • Bank of New York Mellon Corp Earnings (BK)
  • 6:00 PM IST: Initial Jobless Claims
  • 6:45 PM IST: Industrial Production & Capacity Utilization
  • 7:00 PM IST: Fed Chair Jerome Powell Testifies

Fun Fact of The Day 🌞

MySpace was purchased by News Corp for $580 million in 2005 and sold by News Corp for $35 million in 2011


Disclaimer: The content of this article has been created and published by Winvesta India Technologies Pvt. Ltd., in order to ease the reader’s understanding of the subject matter. The information and/or content (collectively “Information”) provided herein is general information sourced through various news reports and does not constitute a research report or a research analysis. The Information is not intended to offer advice, target or solicit any particular customer or group of customers to buy or sell securities. 

Winvesta does not render any research or advisory services and provides a more detailed description of its services on its website and mobile application along with the terms and conditions published therein from time to time. While reasonable care has been exercised to ensure that the Information is adequate and reliable, no representation is made by Winvesta as to its accuracy or completeness and Winvesta, its affiliates, subsidiaries and employees accept no liability of whatsoever nature for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this Information. Neither Winvesta nor any of its affiliates are acting as an investment adviser, research analyst or in any other fiduciary capacity. Accordingly, reader’s are expected to undertake their own due diligence in consultation with their own advisors and are advised not to solely rely on the Information. Any such reliance shall be at the reader’s own risk. 

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.


Start Building Your Global Portfolio Today

Download Winvesta App now to Get Started