Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
Oatly stock will be publicly traded soon, and it could be one of the best buys of the year.
Oatly filed for IPO with the U.S. Securities and Exchange Commission in February 2021. It will trade under the stock ticker OTLY.
Oatly stock stands to gain from the biggest trend on earth: population growth.
The population size is growing significantly with each generation. Gen Z became the largest population, outpacing millennials and baby boomers in 2020, comprising 32% of the global population, or 2.47 billion people.
Here's the kicker: People tend to get more lactose intolerant with age. They are increasingly unable to produce lactase, which leaves them unable to synthesize lactose.
They can't drink cow's milk.
So, it's very likely that people in the future will line up to buy non-dairy milks, Oatly being one of the primary vendors.
That would make Oatly a sure buy. Though, IPOs often present the risk of buying too soon.
Here, we'll tell you when to buy the Oatly IPO and help you learn a little more about Oatly stock along the way.
What Is Oatly?
Oatly makes oat milk. It's simply non-dairy milk made from oats. The company also makes yogurt and other dairy products from the same process.
While the company is based in Europe, primarily serving Sweden, Germany, and the U.K., Oatly sells products in over 70,000 stores around the world. That includes thousands of Starbucks Corp. (NASDAQ: SBUX) locations.
This company was founded in 1994, but the oat milk trend has only recently begun catching steam. So, we could have a massive grower on our hands if the trends progress toward a more carbon-conscious mindset.
That's right, one big driver of plant-based companies like this is lowering carbon emissions.
It's not just Beyond Meat Inc. (NASDAQ: BYND) and Impossible Foods wanting to protect the environment. Oatly found it makes 80% less greenhouse gas and takes 60% less energy to produce 1 liter of oat milk than 1 liter of cow's milk.
This is already a massive trend on its own. But Oatly stock has many other timely and financial factors that could make it a buy.
Here are some markers that could take Oatly to the next level...
Oatly's Influence Is Spreading
Oatly is backed by names like Oprah Winfrey, Natalie Portman, former Starbucks CEO Howard Schultz, and Roc Nation, the entertainment agency founded by Jay-Z.
Sure, you might say, "What's another celebrity?" But this could play a bigger role in this company's success than you think.
These endorsements can play a huge role in moving the company toward market dominance. We see this with Canopy Growth Corp. (NYSE: CGC), the cannabis company partnering with Martha Stewart and Snoop Dogg.
Today, Canopy is the first name many of us consider when thinking about the marijuana industry.
Oatly has a similar appeal. These celebrities also backed the company in July 2020 as part of a fundraising round that raised $200 million.
Oprah is excited about Oatly. And that hype has stretched through New York city coffee shops as well as Dunkin Donuts stores across the United States.
That is only the beginning of what makes Oatly a potential buy.
Oatly Is Financially Healthy
Oatly is not yet profitable. But its IPO prospectus shows revenue more than doubling from 2019 to 2020, to $421 million. Revenue growth is a great sign.
Likewise, growth in cash and cash equivalents in the same year, $10.6 million to $105.4 million, is a good sign. That's 894% growth.
With its presence in so many stores, and the brand amplified by so many powerful names, there is likely more revenue growth coming down the pike. Oatly could become profitable very quickly.
There also does not appear to be any slowdown in the health and environmental-consciousness trends driving this company forward. Oatly comes not long after Beyond Meat had an IPO in May 2019. Impossible Foods is prepping for a 2021 IPO as well.
Beyond Meat shares popped 245% in their few months trading. A Canadian stock called The Very Good Butchers grew 800% in days following its IPO on the Canadian exchange.
All that said, there is definitely something to these plant-based trends. But there is always a catch...
Should You Buy Oatly Stock?
With vegan foods, and oat milk on its own, growing in general popularity, it could be wise to take a shot at buying this stock.
However, with IPOs, it's often the case that if you buy too soon, prices could crash below normal levels.
The way this works is institutional investors buy early, raising excitement in the market about the stock, and then they pull the plug when it grows to their liking and the stock falls like a domino.
This doesn't have to happen immediately after the IPO, either. In fact, it happened to Beyond Meat after the stock reached its peak in July 2020. Following a steep four-month rise to $234 from IPO, the stock crashed 67%, to just $74, by the end of the year.
However, what happened next is what separates the winners from the losers. The stock leveled off. It's currently settled around $108 and doesn't appear to be fluctuating like before.
That's because a large segment of people believes in the product. The plant-based meat market is estimated to hit $13.8 billion by 2027, up 318% from $3.3 billion in 2019.
This demand will no doubt spill over into dairy products as well.
All of this could add to the Oatly product's longevity, which would make Oatly stock a buy as soon as you can grab shares.
The Complete List of Best (and Worst) Stocks for 2021
Wall Street insider Shah Gilani says 2021 could be a gold mine for Americans.
He's showing his subscribers exactly which stocks to buy and which to sell.
But you're getting it all for free - no sign-up or credit card required.
Prices, tickers, and company names will be coming your way fast.
Follow Money Morning on Facebook and Twitter.
About the Author
Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.