Oatly Group AB (OTLY): A Bull Case Theory 

We came across a bullish thesis on Oatly Group AB on Value investing subreddit by  No-Topic5958. In this article, we will summarize the bulls’ thesis on OTLY. Oatly Group AB’s share was trading at $11.61 as of January 29th.

Oatly Group AB, an oatmilk company, provides a range of plant-based dairy products made from oats in Europe, the Middle East, Africa, the Asia Pacific, Latin America, the United States, Canada, Mainland China, Hong Kong, and Taiwan. Since the previous post two weeks ago, the company’s stock has already risen roughly 20%, reflecting growing investor confidence in its turnaround story. The recently reported third-quarter results marked a significant milestone, delivering the first operational profit in a decade—$3.1 million, representing 3.8% in constant currency and 7.1% reported margins—alongside the highest revenue and profit since the IPO.

This quarter validates management’s strategy of prioritizing sustainable, profitable growth over top-line expansion, providing credibility to their two-year narrative. Management maintained guidance, signaling an expected Q4 profit between $8 million and $18 million, with early sell-out data suggesting growth could surpass expectations.

Strategic developments are further reinforcing the investment case. In August/September, Platin SARL, led by JAB Holdings veteran Olivier Goudet, acquired roughly 9% of equity and an additional ~1% in convertible shares, highlighting long-term confidence. Debt restructuring through Nordic bonds has reduced interest costs and enabled early retirement of part of the 2028 convertible debt, indicating cash flow strength. Favorable, unwithdrawn credit contingent on four positive EBITDA quarters could provide further low-cost funding next year. The company is also conducting a strategic review of its China operations with JP Morgan, hinting at potential broader partnerships or acquisition by JAB Holdings.

Meanwhile, a rebranding from dairy alternatives to lifestyle drinks, beginning with matcha in Europe, positions the company for a larger addressable market and higher-margin opportunities, especially if combined with JAB’s manufacturing and distribution capabilities. Given the strong operational execution, strategic initiatives, and thin float, the current valuation appears compelling with an attractive risk/reward profile.

Previously we covered a bullish thesis on Oatly Group AB (OTLY) by boolean__ in December 2024, which highlighted operational inefficiencies, high COGS, and potential profitability through cost controls. The company’s stock price has appreciated approximately by 1530% since our coverage. This is because the thesis played out, with management delivering the first operational profit in a decade. No-Topic5958 shares a similar perspective but emphasizes debt restructuring, strategic investor participation, and rebranding to lifestyle drinks.

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Disclosure: None.