Oatly’s stock fell more than 9% before recovering slightly Thursday after a hedge fund accused the company of overstating its revenue and misleading investors about its sustainability claims. In a 124-page document released Wednesday, Spruce Point Capital dismisses the oat milk trend as a “food fad” and accuses Oatly of various accounting problems. “We believe Oatly will sorely disappoint investors and will never achieve profitability,” Spruce Point said of the company, which is valued at more than $12 billion. Oatly called the claims false. But shares were down to trade just above $18 midday — their lowest level since the buzzy Swedish oat milk company began trading on the New York Stock Exchange in May. The stock closed down 5%. Spruce Capital also questioned the company’s environmental practices — a central component of Oatly’s marketing, which positions oat milk as less water-intensive than dairy and other plant-based milks. “While investors are enamored with its sales growth in the plant-based food fad, and its commitment to [environmental, social and governance] practices, we believe they should be focused on its loss of market share in Sweden and the U.S.,” among other problems, the report says. Spruce Point expressed concerns surrounding Oatly’s ability to source enough supply to meet its quality and price objectives as commodity costs rise, and it also called for Oatly’s board to hire an independent accountant to open an investigation into the claims. A spokesperson for Oatly said Spruce Capital is “making false and misleading claims.” “This short seller stands to financially benefit from a decline in Oatly’s stock price caused by these false reports,” the spokesperson said. “Oatly rejects all these false claims by the short seller and stands behind all activities and financial reporting.” Oat milk sales in the United States are up about 1,200% over the past two years, according to Nielsen. Last year, Oatly received $200 million from a Blackstone-led, star-studded investment group that included Oprah Winfrey, Natalie Portman and former Starbucks CEO Howard Schultz. And in March, Starbucks rolled out oat milk in its stores, only to sell out a month later. — Danielle Wiener-Bronner contributed to this report.