Nowadays, milk isn’t necessarily what you think it is. Thanks to advancements in food-processing technologies as well as consumer demand for healthier alternatives and environmentally friendly options, plant-based milk has taken off like wildfire. Among the leaders in this space is Oatly, which specializes in oat-derived milk and related products. Leveraging incredible financial and celebrity backing, Oatly launched its IPO on the NASDAQ in May of 2021 and is pressing forward.
When did Oatly IPO?
On Feb. 23, 2021, Havre Global AB, which is the parent company of Oatly, confidentially submitted Form F-1 with the Securities and Exchange Commission regarding its IPO proposal. At the time of the submission, Havre’s management team did not disclose key details, such as the offering share count or the price range.
Due in large part to significant celebrity interest, including Oprah Winfrey, Jay-Z and Natalie Portman, as well as business tycoon Howard Schultz who formerly headed Starbucks (NASDAQ: SBUX), Oatly got a lot of press leading up to its IPO on May 17, 2021.
Oatly Financial History
On July 15, 2020, lead investor Blackstone Group helped raise $200 million for Oatly during a private equity funding round. This was a huge step up from a venture funding round held on Oct. 31, 2019, which saw Oatly raise $41.4 million.
Thanks to strong interest for the Oatly IPO, many analysts predict that the plant-based product manufacturer could enjoy a valuation surpassing $5 billion. According to a CNBC report, Oatly hired Morgan Stanley (NYSE: MS), JPMorgan Chase (NYSE: JPM) and Credit Suisse (NYSE: CS) as underwriters for its public offering.
In 2019, the company generated approximately $200 million in revenue. Management targets roughly $400 million in top-line sales for this year. Given the broader sentiment toward sustainable goods and services, this may not be an unreasonable forecast.
According to various high-level sources including McKinsey & Company, survey after survey reveals that millennial and Generation Z consumers are willing to pay more for sustainable goods and services. Primarily, younger demographics pay attention to a product’s environmental footprint and social impact, putting Oatly on firm ground Additionally, these three factors may provide an upside catalyst for its equity units.
- Plant-based evolution: Companies such as Beyond Meat (NASDAQ: BYND) and Impossible have performed incredibly well, mostly because of a broader shift toward and understanding about responsible food supply chains. Further, if there was any good that came out of the pandemic, it’s recognition that society needs to diversify away from animal-based proteins.
- Diverse dietary needs: As the U.S. and other nations become increasingly diverse, so will the food supply chain require diversification. Whether through shared genetic traits, personal belief systems or a myriad of other factors, no dietary standard that fits everyone perfectly exists. Thus, Oatly stock addresses holistic diversity.
- Political timing: Oatly plans its debut at a fortuitous time in American politics, with the Biden administration focusing on environmental responsibility. The company’s push to reduce dependency on animal proteins directly impacts sustainability, which should prove popular with many investors.
At the same time, you will want to know the risk factors. Primarily, Oatly opens itself to commoditization risks. Since its products carry a hefty premium, off-brand competitors could potentially compete with Oatly on price.
Also, oat-based products may not suit all consumers, particularly if they’re looking to lose weight. For that, almond milk offers a potentially superior (and definitely cheaper) solution.
How to Buy Oatly Stock
Once you’ve learned how to buy stocks, you can look into Oatly stock today, potentially adding it to your portfolio.
- Pick a brokerage.
Before you buy Oatly stock, you must first select a brokerage. These days, most brokerages offer similar incentives, such as commission-free trading and ample education material and learning opportunities. Therefore, you will want to pick a broker that best matches your preferences and addresses your investment growth trajectory.
For instance, a mobile trading app fits into the typical millennial schedule, which may encompass a primary job, side gigs and personal endeavors. But if you anticipate developing your trading craft, you may want to do business with a much more robust platform.
- Decide how many shares you want.
Although a seemingly obvious step, you will want to decide how many shares of Oatly stock to purchase. More importantly, you should make this decision prior to creating the order.
With numbers flying all over the map, trading can be a very stressful activity, especially if you’re new to the game. Therefore, having a game plan ahead of time mitigates the variables associated with fluctuating human emotions.
- Choose your order type.
Similar to the determination of share count to purchase, you should understand basic market terminology before placing a wager. Of particular significance is the role of order types in your trading tactics.
• Bid: The bid is the highest price a buyer will offer for a stock. It is always lower than the ask.
• Ask: Conversely, the ask is the lowest price that a seller will accept. It is always higher than the bid.
• Spread: The spread is the difference between the bid and ask price and is important for two main reasons. First, market makers profit from this margin as a reward for holding stocks on their books prior to distribution to willing buyers. Second, the spread represents market liquidity. Tighter spreads indicate more ample liquidity while wider spreads indicate illiquidity.
• Limit order: For maximum control and transparency, you want to place limit orders, which only execute at a predetermined price. But the disadvantage here is that you can leave your limit order hanging because no guarantee exists that the target stock will reach said price.
• Market order: For guarantees that your request will go through, choose a market order. This order type fulfills at the next available price if placed during normal session hours. The shortcoming is that market orders automatically execute at the rate least favorable to you — buy orders on the ask, sell orders on the bid.
• Stop-loss order: A stop-loss order is a protective function for your portfolio, automatically exiting you out of your position at either a predetermined price or the next available price, whichever comes first. The risk with stop-loss orders is the gap-down session, where a stock opens much lower than the prior session’s close. In that case, a stop-loss order will result in a lower-than-anticipated exit price.
• Stop-limit order: A stop-limit order is functionally similar to a stop loss with one key distinction, exiting only at a predetermined price. This prevents the nasty surprises associated with gap-down sessions. However, if a stock continues to tumble, you would have been better off placing a stop-loss order.
- Execute your trade.
To execute your trade, follow these steps for a market order:
1. Select action type (buy or sell).
2. Enter the shares you want to acquire (or sell).
3. Hit the Execute button.
Placing limit orders follows the same steps above, with the exception that you will input your preferred price of execution.
Which order type to use mostly depends on how you prefer to construct your portfolio.
Best Online Brokers
Below is a list of the best brokers to consider.
Socially Responsible can be Profitable
With the emerging generation of consumers placing more importance on sustainable goods compared to prior generations, Oatly stock has made its debut at a favorable time. Moreover, the plant-based food and beverage manufacturer offers more options for our diversifying population.
Yet there’s no such thing as a risk-free investment. Before you buy Oatly stock, you should consider challenges to this bullish thesis, which mainly revolve around competitive and pricing challenges.