Spruce Point Capital Management takes short position against oat milk maker as Oatly rejects “false claims”
Activist short seller Spruce Point Capital Management has accused Oatly of misleading investors on its accounting and sustainability practices.
In a report published yesterday, the fund manager said it believed Oatly had overstated its revenues and net income and understated its costs.
“Oatly’s MD&A discussion gives very little discussion about revenue or cost of sales drivers,” the report said.
“We believe its gross margins are overstated by 640% by not including outbound shipping costs, in conformity with industry best practices. Oatly says nothing about its exposure to oat and rapeseed commodity prices, despite these costs having skyrocketed 33% and 38% YTD, respectively,” it added.
Spruce Point said the Swedish dairy-alternative company was losing US market share to competing brands Chobani and Califia Farms.
On sustainability, Spruce Point claims Oatly has “cherry-picked” results in its 2013 study (updated in 2016) by “failing to show that its impact on water consumption is worse than dairy milk,” the report stated.
The firm has taken a short position against the oat milk maker and has called on it to hire an independent forensic accountant.
Oatly’s shares, listed on the Nasdaq, dropped to an all-time low of $19.84 per share on Wednesday 14 July.
Ahead of the market opening, the price had risen to $20.54.
In a statement to CNBC, Oatly rejected Spruce Point’s claims and said the short seller stood to financially benefit from a decline in Oatly’s stock price.
Date published: 15 July 2021