Oatly is being investigated for reportedly exaggerating the financial documents of its company, and consequently misleading investors.
On Wednesday, 14 July 2021, the activist investors behind Spruce Point Capital revealed the results of what was reportedly an extensive investigation into the financial records of oat milk company, Oatly. The investigation revealed that the oat milk brand is unlikely to be profitable or meet the expectations of investors.
Spruce Point’s presentation on the matter included financial documents and data that was uncovered through the Freedom of Information Act. In the presentation, the firm reported that it believes Oatly has misled its investors by misrepresenting past revenues and other financials, and by also exaggerating claims of success in countries such as China. According to Spruce Point, the company previously overstated the exclusivity of its formulas and manufacturing processes.
Furthermore, the firm went on to allege that Oatly had acted recklessly in pursuit of profits, because it wanted to sell its stock at an inflated valuation. The report cautioned investors at Oatly to be wary of the company’s Chief Financial Officer (CFO), Christian Hanke, and the audit chair, who reportedly both have prior corporate accounting scandals. Moreover, the Spruce Point report called for Oatly to hire an independent forensic accountant to investigate the claims further.
With evidence of a losing market share and shelf space, Oatly’s valuation has expanded more than six times from its $200 million in 2020. Following the release of the report, the Oatly shares dropped by five percent and, as at Thursday, 15 July 2021, they further dropped by two percent.
Lastly, providing comment on the matter, Oatly said that the claims made by Spruce Point Capital were false and misleading. Oatly reportedly referred to the firm as a short seller that stands to benefit financially from a decline in Oatly’s stock price. The oat milk company said it rejects all the claims and stands behind the accuracy of its financial records.