Food & Drinks

Oatly Is The Latest Brand To Gorge On Investors’ Food Frenzy. It Won’t Be The Last.

Oatly is about to pour it on thick. 

The maker of oat milk known for its clever and ubiquitous advertising filed to go public this week, the latest trendy brand to tap into what looks like an all-you-can-eat market for food IPOs. 

The Swedish startup is the fifth food brand to recently announce plans to go, after six have debuted on the public markets in the past 12 months – more food activity in the markets than the entire decade before it. The sustainability-focused business is planning to list on the Nasdaq exchange, in what could be a $10 billion valuation, though the filing didn’t include those financial details. 

If recent history is any guide, its share price will look cheap by the end of the first trading day.

Each of the food listings in the past year have surged on opening day, following the benchmark set by Beyond Meat, which listed in May 2019 and has more than doubled in value, as investors clamor for the stocks that offer sustainability benefits. But most of the past year’s listings have receded since listing.

Aside from Oatly, at least four more companies – celebrity-backed Flow Water, agtech unicorn AeroFarms, and Biltong-style meat snack maker Stryve and food-focused AF Acquisition Corp – are planning offerings this year, putting an end to a sleepy decade for food offerings that saw just four IPOs in the prior 10 years before Beyond Meat’s IPO.

Oatly, which was last valued at $2 billion, is reportedly eying a $10 billion listing. Its official filing showed 2020 revenue of $421 million with a net loss of $60 million. Investors include billionaire Oprah Winfrey and global investing firm Blackstone Group.

Food listings rarely come close to that $10 billion number, but the frenzy in the space resetting expectations. Food delivery service DoorDash, which went public at the end of 2020, rose to a market cap of more than $60 billion within hours of listing. Impossible Foods is also rumored to be testing the waters with a potential $10 billion valuation, while Instacart, another IPO suspect, would be more in line with DoorDash’s mega-listing in the tens of billions. 

So far, the recent deluge of food industry listings has been fueled by reverse-mergers known as SPAC listings, which have provided food startups with a cheaper and quicker avenue for going public than ever before (where, otherwise, a food company’s best bet was getting acquired by a publicly traded conglomerates, which pays much less). 

The recent push to bring the largely private world of food and farming to the public markets started with pasture-raised egg seller Vital Farms in the summer of 2020. There was also iconic potato chip company Utz, followed by smoothie supplements brand Laird Superfood. Then in the new year came a rare Martha Stewart investment: a greenhouse tomato grower called AppHarvest. 

A flurry of other listings are still expected, including Biltong-style meat snack maker Stryve. Though some analysts suggest SPACs are starting to slow, Stryve co-chief executive officer Jaxie Alt says preparing for the listing has “put a whole other energy into the business” — as investors are swarming behind the scenes to invest. That’s a big deal for a startup which Alt says struggled during its last fundraising round because private equity investors didn’t understand why the startup had built its own plant in Oklahoma, which gave it a lot of upfront costs.

“I think about when Netflix opened up and all of a sudden there’s Netflix and all these other places are creating content. It feels like the same thing, because we were going to the same group of people for money, and if they don’t say yes, you are hamstrung,” Alt says. “For so many of these food companies, it opens up this new avenue of capital that just hasn’t been there.”

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