Oatly Rallies On Nasdaq Debut: What Investors Need To Know

Swedish oat milk maker Oatly Group AB OTLY opened for trading Thursday after announcing an initial public offering on of 84.4 million American Depositary Shares priced at $17 a share, on the high end of expectations.

Oatly’s IPO raised $1.43 billion, and the $17 share price gives the company a $10-billion valuation.

The stock was trading 26.08% higher to $21.43 at last check. 

Oatly's IPO Timing: The IPO pricing is a positive sign for Oatly. Recently, as the stock market has dipped, investors have been shying away from growth companies that go public, as reflected in the 4.8% fall in May of the Nasdaq Composite Index, which is full of growth companies.

Both Oatly and its lead underwriters Morgan Stanley, JPMorgan Chase & Co. and Credit Suisse expect the company to avoid the weakness of the broader market since the company is a consumer name as opposed to a technology company.

Oatly CEO Toni Petersson told Forbes: “We’re going to use the proceeds to expand our production capacity. That’s why the time is right now. Now is the time. It is perfect for us from a business perspective.”

Oatly's Market, Financials: Oatly is backed by celebrity investors Oprah Winfrey and Natalie Portman, as well as leading global investment firm Blackstone Group Inc. BX and lead investor Verlinvest.

Oatly has 53% market share for alternative dairy products in Sweden, where the company was founded in 1994. The company is the world’s largest oat drink company, with $140.1 million in revenue for the first three months of 2021, up 66.2% year-over-year.

Oat milk’s popularity has risen dramatically recently due to a shift among consumers toward more plant-based foods.

Yet the company’s losses have increased, according to regulatory filings. In 2020, its net loss was $60.4 million, up from $35.6 million in 2019. Revenue is also rising: in 2020, it increased to $421.4 million, up from $204 million in 2019.

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