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Oatly Shares Jump on its first day in Market

On the first day of trading on the Nasdaq Stock Market, the Swedish oat-milk producer's stock rises 19%.

Oatly Group AB, a Swedish oat-milk producer, saw its stock rise 19 percent in its first day of trading on Thursday, a positive sign for the IPO industry.

The stock, which trades under the symbol OTLY, closed at $20.20 on Thursday, well above Oatly’s initial public offering price of $17, valuing the firm at about $12 billion. That’s a big jump from just ten months earlier, when Oatly agreed to sell a 10% stake in the business to a consortium of celebrities and Blackstone Group Inc. for $200 million, valuing it at $2 billion.

The strong performance of Oatly shares, as well as Procore Technologies Inc.’s stock, which gained 31% on its first trading day on Thursday, bode well for the IPO market. The market has been cooling in recent weeks, despite a decline in the wider stock market. On Thursday, all three major stock indices rose.

According to several IPO bankers, several companies preparing to launch IPOs in June were watching this week’s debuts before deciding whether to proceed with their own offerings.

Oatly disclosed 2020 financials that showed sales jumped 106% to $421.4 million, while losses widened to $60.4 million from $35.6 million in 2019.

Oatly was founded in 1994 in Sweden, but it gained worldwide recognition when it entered the U.S. market in 2016. Products include ice cream, yogurt and baking supplies like vanilla custard.

The Oatly IPO Happens During a Plant-Based Boom

In recent years, nondairy milk products have grown in popularity due to health and environmental concerns. Plant-based meats, such as Beyond Meat (BYND) and Impossible Foods, which is planning an IPO later this year, are also gaining traction.

According to a Euromonitor survey, the nondairy milk market in the United States will rise to $3.6 billion in 2025, up from $2.5 billion now. The global market is projected to reach $11 billion, up from $9.5 billion now.

According to Oatly’s website, the food sector accounts for 25% of global greenhouse gas emissions. The meat and dairy industries account for half of these emissions.

Oprah Winfrey and Jay-Z are among Oatly’s high-profile supporters and investors. Oatly is used by Starbucks (SBUX) in two famous drinks.

However, another investor caused a stir ahead of the Oatly IPO. Blackstone’s (BX) $200 million investment in the company last year caused outrage because the private equity firm’s investments in U.S. oil and gas firms ran counter to its climate change commitments. Blackstone was flanked by Oatly.

“We thought that if we could convince them that it’s as profitable (and in the long-term even more profitable) to invest in a sustainability company like Oatly, then all the other private equity firms of the world would look, listen and start to steer their collective worth of 4 trillion U.S. dollars into green investments,” Oatly said on its website.

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