Will Oatly actually survive these 3 key challenges?
After losing 90% of the share value from its peak, Oatly is down but not out.
A âsuccessfulâ IPO that trapped investors
Having spent nearly a decade rebranding itself as a planet-friendly drink âmade for humansâ, Oatlyâs Initial Public Offering on NASDAQ in May 2021 was a big success. Priced at $17 a share, Oatly raised $1.4 billion at a whopping valuation of $10 billion from the IPO. Oatly shares (stock ticker âOTLYâ) jumped 30% to $22.12 on its opening trade and reached $29 in mid-June.
However, Oatlyâs valuation was very expensive from the get-go and relied on investorsâ huge confidence in its future success. Oatlyâs Price-to-Sales ratio at the IPO was over 20x, when US consumer staples stocks typically trade around 1x - 1.5x. This meant that Oatly was 15 times more expensive than its broader peers, which at the time was justified by Oatlyâs rapid growth rate.
Unfortunately, the bet on Oatlyâs publicly traded stocks has so far been catastrophic for their investors. From the 2021 peak, Oatlyâs share value dropped by over 90% to around $2.5 today - and thatâs after a recent rebound from the partnership news with Ya YA Foods (more details below).
OTLY Stock Chart, click here for the full chart
Oatly faced three key challenges in the last quarter
Oatly faced three main challenges in the last quarter, and consumer demand was not one of them:
Technical issues inside the Ogden facility that constrained the product supply
Inflation and COVID restrictions in China
FX headwinds resulting in a ~10% lower reported revenue
Now the million-dollar question is, can Oatly overcome these issues and recover? Letâs go for a deep dive.
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