OTLY Stock: Price Slumps Over 12% Post Q3 Results
November 18 2022 - 6:02AM
Finscreener.org
Shares of Oatly
Group (NASDAQ:
OTLY), an oatmeal company
fell over 12.5% yesterday after it announced Q3 results for 2022.
Oatly reported revenue of $183 million and an adjusted loss of
$0.18 per share. Analysts forecast the company to report revenue of
$212.1 million and an adjusted loss of $0.11 per share in the
September quarter.
Oatly also estimated revenue in
2022 to range between $700 million and $720 million, well below
estimates of $798.6 million. Its revenue and earnings miss, as well
as a tepid guidance, has dragged Oatly shares lower. OTLY stock
price is currently trading 91.5% below all-time highs, valuing the
company at a market cap of $1.26 billion.
Let’s see what impact Oatly’s
performance in Q3 and if the stock can stage a comeback by the end
of 2022.
Is Oatly stock a buy or sell?
Oatly
offers a wide range
of plant-based dairy products made
from oats that include oat milk, frozen desserts, ice creams, and
yogurts, in addition to ready-to-go drinks. The company claimed Q3
results were below expectations due to COVID-19 restrictions in
Asia, production challenges in the Americas, and foreign
exchange-related headwinds.
In the year-ago period, Oatly
reported revenue of $171 million and an adjusted loss of $0.05 per
share. We can see that while sales were up just 5% year over year
its adjusted losses more than doubled compared to the prior-year
period.
But Oatly CEO Toni Petersson
stated, “However, we continue to see strong velocities,
year-over-year sales volume growth, and minimal price elasticity
globally which we believe demonstrates the power and resilience of
the brand.”
The company’s management aims to
improve operational efficiencies, which should expand profit
margins and lower cash burn rates amid a macro-environment that is
challenging and inflationary.
Oatly stock went public in May
2021 and it laid out plans to increase spending at an aggressive
pace. It originally forecast to spend between $300 million and $400
million on capital expenditures in 2022. In May 2022, it increased
its CAPEX forecast to between $400 million and $500 million, while
its revenue guidance for the year stood at $830 million.
But lower consumer spending and
rising interest rates have meant the company lowered its CAPEX
targets to between $220 million and $240 million in 2022. Its
revenue estimates have also declined by more than $100 million in
the last six months, making this unprofitable stock a high-risk bet
right now.
What next for OTLY stock price?
Oatly has lowered its revenue
estimates in Q4, and the outlook assumes reasonable containment of
COVID-19-related infection rates globally, no further lockdowns in
China, and no additional deterioration in Europe’s macro
environment.
Oatly and its
plant-based food peers, such as Beyond Meat (NASDAQ: BYND),
are competing with lower-priced essential products such as meat and
milk. As the plant-based vertical is wrestling with much lower
profit margins and high price points, demand might fall off a cliff
due to a decline in consumer spending.
Oatly is a two-decade-old company
but remains unprofitable and is yet to gain traction as a household
brand in Europe. The increase in competition and other non-dairy
alternatives might further pressurize revenue and profit margins in
the future. Its adjusted losses might touch $0.60 per share in
2022, from a loss of $0.33 per share in 2021.
There are far better stocks
trading on the bourses right now that are profitable and enjoy a
competitive advantage over peers compared to Oatly.
Beyond Meat (NASDAQ:BYND)
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