Is Oatly stock a buy or sell after crashing by 68% from ATH?

By:
on Nov 29, 2021
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  • Oatly stock price has crashed by more than 68% from the all-time high.
  • The stock has crashed after a major short-seller report.
  • There are concerns about its valuation and growth prospects.

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The Oatly (NASDAQ: OTLY) stock price has had a rough time as a public company. The stock is trading at $9.22, which is about 68% below its all-time high. This drop has brought its total market capitalization to about $5.22 billion.

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Why has OTLY crashed?

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Oatly is a relatively popular consumer-facing company that went public in May this year. The company sells oat milk directly to consumers and through its retail outlets. It has one of the biggest market shares in the industry.

Oatly stock price jumped to an all-time high after the company went public in May this year. This rally jumped because of the company’s popularity among millennials. At the time, the firm’s products were in such a high demand that people were queuing to get them. 

At the same time, Oatly shares were boosted by the roster of celebrity backers. Some of the leading investors in the company included the likes of Oprah Winfrey and Natalie Portman.

However, since going public, sentiment among investors has deteriorated. This trend has helped to push the OTLY stock price to a record low, wiping billions in value.

There are several reasons why the stock has crashed. First, investors believe that the company is overvalued. Besides, Oatly is a 20-year old company that is still unprofitable. At its peak, it was valued at more than $8 billion.

Second, a recent short report by Spruce Point Capital has not helped the situation. The short-seller argues that the company has misled investors about its sales and profitability. It also argues that the firm is actually losing market share as more companies enter the industry. 

Third, the hedge fund points to the fact that Oatly does not have any proprietary technology to guard its market share. It has also accused the firm of greenwashing its environmentally-friendly credentials.

Oatly stock price forecast

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Oatly stock price

The four-hour chart shows that the Oatly share price has been in a major bearish trend in the past few months. Subsequently, the stock has crashed below the 25-day and 50-day moving averages. It has also formed a bearish gap and is below the Ichimoku cloud.

Therefore, for now, the OTLY stock price will likely continue the bearish trend as its demand fades. However, in the long-term, the stock will likely bounce back as investors rush to buy the dip. Historically, we have seen many investors buy stocks that underperformed in a certain period. All that Oatly needs is a strong quarterly results.

Spruce Point Capital Food & Beverage Stock Market