Oatly Accused of Shady Accounting Practices, Greenwashing

Oatly (NASDAQ: OTLY), the Swedish company that creates oat-based milk alternatives and recently made its public debut at a market value of nearly $13 billion, is being accused of shady accounting practices and greenwashing.

Activist short seller Spruce Point Capital Management has accused Oatly of overstating its revenue and margins, as well as misleading investors about its sustainability initiatives. The hedge fund, which has taken a short position against the oat milk maker, points out in its report that Oatly’s most recent investor presentation showed an estimated revenue of $12 million in 2018, when in fact Nielsen and Umgas Magazine, two Swedish publications, both reported that the company’s net US sales only reached $6 million during that year.

Moreover, Spruce Point also accuses Oatly of overstating its gross margin, given that the company failed to account for outbound shipping and handling costs in its accounting calculations. The company also reportedly failed to acknowledge that its gross profit presentation does not commensurate to that of similar companies. The hedge fund found that Oatly’s gross margin is actually 6.4% lower once shipping and logistics are accounted for.

Oatly, which has referred to itself as a more environmentally friendly alternative to cow’s milk and other non-dairy alternatives, has also allegedly been misleading investors about its green credentials. In its short seller report, Spruce Point accuses the company of cherry-picking data by not disclosing that its water usage is actually higher than that of cow’s milk production.

In addition, the hedge fund also points out that Oatly’s New Jersey facility has not been in good standing with the Environmental Protection Agency, although EPA’s website fails to disclose the details surrounding the violation(s). The short seller also retrieved documents via the Freedom of Information Act in New Jersey, which showed a number of problems with the Oatly facility’s wastewater in 2019. The oat milk company has yet to open a wastewater treatment facility, despite the significantly high levels of byproduct that result from oat milk production.

Since Oatly’s IPO in May, the stock has risen by more than 4.5%, giving it a market value of around $12.5 billion. However, following the news, the company’s stock hit a new low of $19.84 per share, before rebounding to $20.70 at the time of writing.


Information for this briefing was found via Spruce Point. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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