Oatly shares fall after short seller Spruce Point claims overstated revenue

Oatly shares fall after short seller Spruce Point claims overstated revenue

Shares of Oatly Group AB (OTLY.O) fell as much as 7% on Wednesday after short seller Spruce Point Capital Management alleged the Swedish vegan milk maker used misleading accounting practices to inflate its revenue.

Spruce Point, which has taken a short position in Oatly, also claimed the company misrepresented environmental sustainability practices related to its production to investors.

“Oatly rejects all these false claims by the short seller and stands behind all activities and financial reporting,” a company spokesperson said in an emailed statement.

Malmö, Sweden-based Oatly, which debuted on U.S. public markets in May, makes dairy alternative products that are sold in more than 20 markets across Europe, the United States and China.

The company has tie-ups with several cafes in the United States, including Starbucks Corp (SBUX.O). It also sells its products online and through food retailers such as Target Corp (TGT.N) and Tesco (TSCO.L).

As of Wednesday’s close, about 6.2 million Oatly shares were sold short, representing about 1% of the float, according to S3 Partners, which said the shares shorted increased by about 2.7 million in the last 30 days.

“It’s a small short now, but it’s something that might gather some steam,” Ihor Dusaniwsky, S3’s managing director of predictive analytics, said.

Oatly shares were trading down 2.1% at $20.69 in afternoon trading.

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