Oatly is accused of greenwashing and overstating revenue by an activist short seller.
Spruce Point Capital Management, an activist short seller, accused Swedish vegan food and drink company Oatly Group (OTLY) of greenwashing and overstating its revenue on Wednesday.
Spruce Point demanded that the board of directors appoint an independent forensic accountant to launch an investigation into charges of dodgy accounting practices and consumer misinformation about the company’s sustainability policies.
The New York-based firm’s study on Oatly stated, “Spruce Point has gathered considerable data to imply that Oatly’s ambitions to control the oat milk industry are crumbling.”
Spruce Point believes “Oatly will terribly disappoint investors and will never attain profitability,” according to the research.
Spruce Point claims that Oatly “doesn’t practice what it preaches,” claiming that the company has hidden data on its water usage and is putting its global expansion ahead of its sustainability mission. Spruce Point also claimed that Oatly overstated its sales figures, resulting in a gross margin that was 6.4 percent lower when logistics and shipping were taken into account.
According to Spruce Point’s analysis, “we detect times of considerable divergence in sales and accounts receivable growth rates at Oatly.” “This is a classic symptom of possible accounting fraud and is frequently considered as a top red flag for predicting accounting scandals.”
“A short seller is making false and deceptive assertions regarding the company,” Oatly said in an email to the media. A drop in Oatly’s stock price induced by these misleading reports will benefit this short seller handsomely. Oatly rejects all of the short seller’s bogus assertions and stands behind all of its actions and financial reporting.”
In the mid-1990s, Oatly was founded. It also sells ice cream, yogurt, and baking supplies that aren’t made with milk. It went on to become a popular kit among coffee enthusiasts looking for more sustainable, dairy-free alternatives. According to the company’s SEC filing, it was being offered in around 650 coffee shop locations across the United States by 2017, and by the end of 2020, the goods would be available in 10,000 places.
Oatly reported a $60 million loss in 2020 as part of their first public offering filing in April.
Oatly’s initial public offering (IPO) was priced at $17 per share on May 20. At the time, the corporation was valued at around $10 billion.
Oatly’s stock closed at $20.54 on Wednesday, down 0.59 percent or -2.79 percent.