By Dhirendra Tripathi
Investing.com – Oatly (NASDAQ:OTLY) stock fell 4% Wednesday as activist short seller Spruce Point Capital Management accused the oat milk producer of overstating revenue and misleading consumers and investors about its sustainability practices.
“We believe investors are not focused on multiple accounting and financial control weakness which we believe have manifested in revenue and gross margin overstatement of 640 basis points,” Spruce Point said in its 124-page report.
The short seller has called upon Oatly’s board to hire an independent forensic accountant to open an investigation to evaluate its claims.
“We see 30%-70% intermediate downside risk as it fails to achieve lofty targets baked into its valuation. There is long-term potential that Oatly faces insolvency when investors realize that the oat milk food fad has matured and interest in funding money losing businesses wanes,” it said in a note on its website.
The Swedish food company, which listed its shares on Nasdaq in May, called the allegations “false and misleading,” according to CNBC.
Spruce Point alleged that Oatly has lost market share in Sweden and the U.S. and said it will never achieve profitability.