- Oatly shares priced at $17, at the top end of expectations
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- Shares rose in initial trading to $22.74
- The IPO values the company at $9.96bn
- The company is raising $1.4 billion through the listing
- It will trade under the ticker OTLY
Oatly's IPO On The Nasdaq
"Dairy free brand Oatly has milked $1.4 billion from its listing on the Nasdaq stock exchange.
Even though it priced shares at $17 at the top end of expectations, putting a value on the company of almost $10 billion, shares still rose in the first hours of trading to just over $22, a rise of 29%.
Investors swallowed what could be considered a frothy price tag, confident that the company will be able to capitalise on the growing demand for plant based products..
Oatly, based in Malmo Sweden boasts a quarter of a century experience in delivering milk free goods, so it has significant first mover advantage. With net zero ambitions being embraced not just by governments but armies of consumers, the potential in the plant based drinks and food market is huge.
According to Euromonitor, consumers who are who are reducing animal-based products but not following a strict vegan diet, already account for nearly 50% of consumers globally.
Concerns about the dairy industry’s contribution to carbon emissions is partly behind the trend, but concerns about nutrition are also a factor.
More shoppers seem to want an alternative to soya milk, and oat milk is revered for being high in fibre and vitamins, although it has higher levels of calories and carbohydrates compared to plant based milk alternatives.
Competition In The Market
However, there is now stiff competition in the market, with plenty of big, established food players getting in on the act. Nestle targets shoppers with its Nescafe gold alternative lattes, offering almond, oat and coconut options as well as a milk made from peas.
Food giant Unilever already offers dairy-free versions of its Ben & Jerry's ice cream range - made from almond milk as well as a vegan Cornetto and Magnum. Unilever plans a five-fold increase of vegan products over the next seven years, targeting £900m in sales annually.
Coca-cola has also been capitalising on the bubble of interest surrounding non-dairy drinks through its acquisition in 2017 of the AdeZ brand of plant based smoothies. It also expanded its range last year in the alternative dairy market by launching Simply Almond Milk branded products.
Hotel Chocolat in the FTSE AIM index has slipped comfortably into offering non-dairy alternatives as part of its expansive confectionary range.
As demand for alternative milk products heats up, Oatly may well find some of the cream is licked off its share price, unless it can keep rolling out fresh product lines to keep its growing customer base loyal."
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
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