Wild Oats? Inside Spruce Point’s 124-Page Attack Alleging Mismanagement And False Claims At Oatly

Spruce point Capital’s activist investors revealed Wednesday that Oatly, the oat milk darling, was not profitable and will not meet investors’ expectations.

Oatly, shares fell more than 5% Wednesday but regained around half that amount by the close. As of Thursday morning, shares were down by 2%.

Oatly, with a market capitalization close to $12 billion, said that it was aware of a short seller making misleading claims about the company. These false reports will result in a decrease in Oatly’s stock price. This short-seller stands financially to benefit. Oatly rejects any false claims made by the short seller. We stand behind all financial reporting and activities.

  • Spruce Point’s 124 slide presentation questions management‘s execution and the businesses’ sustainability claims. It even contains some documents and data obtained through Freedom of Information Act requests. These are the highlights. Spruce Point warns Oatly that it has misled investors. Oatly is accused of exaggerating China’s success and misstating revenues in the past. Spruce Point also believes Oatly overstated its proprietary formulas and manufacturing methods.
  • “We believe Oatly acted recklessly to pursue profits to race towards an IPO and sell its stock at a high valuation.”
  • Oatly’s value has more than sixfold from Blackstone’s $200 million in 2020, despite evidence of shrinking market share and shelf space.
  • The total plant-based dairy market will be worth $21 million by 2025. Oatly’s value is over half that of today, even though we don’t believe Oatly will ever capture this portion of the market.
  • The plant in Utah may cost up to 100% more than the initial budget.
  • The New Jersey plant, which has wastewater treatment problems, has violated the EPA for several quarters. It has also been exaggerating its sustainability claims.
  • The report alleges that the company had three accounting auditors within six years. It also claims that “investors should be concerned about its CFO, Audit Chair, and their roles in previous corporate accounting scandals.”
  • This is also a one-liner: “World-class in Mind Control marketing.” We believe that a second-rate operations and finance team is necessary.

Here is the complete Spruce Point Report, in which Oatly calls for an independent forensic accountant to investigate these claims.

By the Numbers: Oatly

Market Cap:$11.6 billion

Stock price:$19.70 per Share

Daily Change: Down 4%

Shortening of shares: About 1%, compared to 16% in Beyond Meat

2020 SalesPer IPO filings, $420 million

DistributionThere are more than 60,000 coffee shops and 32,200 retail outlets in over 20 countries.

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Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

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