Simply overhyped
$Oatly Group AB (OTLY.US)$ has grabbed a hefty valuation at its current levels and I think it is overpriced. Let’s jump right into it: “According to the Plant Based Foods Association and Good Foods Institute, plant-based-food sales reached $7 billion in 2020” (Tonya). Oatly’s current valuation sits at around 14 billion even with the recent drop, which is much bigger than the total market size that Oatly is in. But Oatly is a good company, it is in around 60,000 retail stores and 32,000 coffee shops around the world and in 2020 it had 421.4 million in revenue, up more than 100% the year prior (Tonya). But this still puts the company at a current price-to-sales ratio of more than 30. This is extremely high (normal is below 10 for high growth companies) even before considering the fact that the space has many competitors from traditional dairy companies to other plant-based alternatives. Overall, it’s a good company but I think the current price it’s at isn’t sustainable and we will see lower levels in the short term, but in the long term it is still a good company.
But as always before deciding whether to buy a stock or not, do your own research first. Happy investing!
Garcia , Tonya. "Oatly IPO: 5 things to know about the plant-based dairy company." MarketWatch, 21 May 2021, www.msn.com/en-us/money/companies/oatly-ipo-5-things-to-know-about-the-plant-based-dairy-company-before-it-goes-pub lic/ar-BB1gqt3h. Accessed 2 June 2021.
But as always before deciding whether to buy a stock or not, do your own research first. Happy investing!
Garcia , Tonya. "Oatly IPO: 5 things to know about the plant-based dairy company." MarketWatch, 21 May 2021, www.msn.com/en-us/money/companies/oatly-ipo-5-things-to-know-about-the-plant-based-dairy-company-before-it-goes-pub lic/ar-BB1gqt3h. Accessed 2 June 2021.
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Long-term investor here to ask questions and help others out. Cheers!
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