Why a short seller thinks $11 billion Oatly is more overvalued than Beyond Meat: by chloesorvino
When it comes to food stocks on a tear, it’s hard to find two better examples than Swedish oat-milk darling Oatly and plant-based protein leader Beyond Meat. Both have scored sizable market shares of emerging new corners of the food market and have landed soaring valuations as a result.
“We think Oatly is worse than Beyond Meat,” Axler says, zeroing in on a gross margin that is far weaker than reported and the high cost of winning market share. The suggested readjustment shaves off around 7 percentage points off Oatly’s 2020 gross margins: 23.7% compared to the reported 30.1%. Axler is a former investment banker at Credit Suisse who started Spruce Point in 2009 amid the global financial crisis and had early success shorting U.S.-listed, Chinese-headquartered companies, and holding activist interests in companies, including Build-A-Bear. He expects Oatly’s average selling prices to go down over time, which will put even more pressure on profit margins.
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