Spruce Point puts ‘Strong Sell’ on Oatly, sees 30%-70% downside

Short seller Spruce Point Capital Management put a “Strong Sell” on shares of Oatly Group in a short report posted on its website. The stock faces up to 30% to 70% “intermediate-term downside risk, or $6.40 – $14.90 per share, and longer-term insolvency risk,” Spruce Point wrote. “While investors are enamored with its sales growth in the plant-based food fad, and its commitment to ESG practices, we believe they should be focused on its loss of market share in Sweden and the U.S., minimal barriers to entry, lack of competitive advantages, rising commodity input costs, and supply challenges created partly through poorly planned production facilities,” the firm says. Further, Spruce Point believes investors “are not focused on multiple accounting and financial control weakness” which it believes “have manifested in revenue and gross margin overstatement of 640bps.” The short seller is calling for Oatly’s board to hire an independent forensic accountant to open an investigation to evaluate its claims. Shares of Oatly Group are down 2% to $20.71 in morning trading.