Oatly Group (NASDAQ:OTLY), the Swedish maker of oat-based milk, had an auspicious market debut May 20 when OTLY stock began trading.

But I was skeptical.

“Thirteen billion dollars for oat milk?” I asked. That was Oatly’s market cap after rising $5 per share in its first day of trading.

OTLY stock has since had a big rise and a hard fall. It’s trading at less than $18 per share. That’s still a hefty market cap of $10.4 billion. This for a company with 2020 sales of $421 million in an oat milk market estimated to be worth $6.8 billion five years from now.

But I didn’t start this fire. Oatly rose through June 11, topping out at over $28. It was an attack by short sellers, who now have over 20% of the float, that briefly sent shares below the IPO price and brought out the plaintiff’s bar.

What Happened?

What happened was a report from Spruce Point Capital, a short seller that went after Leidos Holdings (NYSE:LDOS) in February. Its 124-page PowerPoint accused Oatly of overstating revenues and margins, concluding it was worth under $10 per share.

Oatly rejected the charges, noting that Spruce Point is a short seller that would benefit from the stock price’s fall.

The report also charged Oatly with “greenwashing.” It said Oatly claims its production methods are environmentally sound when they’re not. The charge focused on a New Jersey plant that sources oats from western Canada and has wastewater issues.

The Bigger Question

I had been more concerned with basic questions, like how you get a $13 billion valuation in an oat milk market estimated to be worth $6.8 billion in five years. It’s not like Oatly will have the market to itself. Danone (OTCMKTS:DANOY), Nestle (OTCMKTS:NSRGY) and PepsiCo (NYSE:PEP) are all pushing plant-based milks. The market for such milk pre-dates the one for cow-based milk, which only developed with mass refrigeration in the 20th century.

The hope, as I saw it, was that Oatly could develop a brand through outlets like Starbucks (NASDAQ:SBUX). It also had that quirky Super Bowl ad, filmed five years ago, with CEO Toni Petersson singing its praises in a field. Hedgeye, which makes bullish market calls, saw the same potential, comparing Oatly to winners  like Lululemon (NASDAQ:LULU) and Chipotle (NYSE:CMG).

The Growth Trajectory

OTLY stock is expected to deliver numbers for the June quarter on Sept. 1, a loss of about 10 cents per share on revenue of $147 million. It reported revenue of $140 million and a loss of 5 cents per share on June 2, in line with estimates.

There are already 13 analysts following the stock at Tipranks, with seven saying buy it and a price target of $40.60, 78% ahead of its present price. Jefferies analyst Robert Dickerson has a buy rating on the stock with a price target of $34. He says that plant-based milks have a total addressable market (for all milks) of $900 billion. Oatly’s expansion plans give it “a long runway for sustained, elevated growth and margin expansion,” he wrote.

The Bottom Line for OTLY Stock

You can speculate on Oatly either way, which is why my retirement account has no position in it.

Both sides carry enormous risk. For the bears, there’s backing from investors like Blackstone Group (NYSE:BX) and units of the Chinese government. For the bulls, there’s big competition and the normal problems of expanding production, as Spruce Point noted.

Either way you’re going to have to watch your investment carefully. Oatly has under 600 million shares outstanding, with 181 million available for trade and only 3.6% held by institutions. You can be buffeted by determined action in either direction, without notice.

Don’t throw any money at Oatly you can’t afford to lose. You could have Lululemon or, as even Hedgeye admitted, you could also have Under Armour (NYSE:UAA).

On the date of publication, Dana Blankenhorn held a long position in PEP. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.