What happened
Oatly Group(NASDAQ: OTLY) was shaping up to be a stock market rocket this week. On Tuesday, for the second day in a row, shares of the alt-milk products purveyor blasted past the S&P 500 index, rising nearly 9% against the index's 1.3% gain. The market continued to be impressed by Oatly's new tie-up with a top name in fast food restaurants.
So what
On Monday, Oatly revealed that it struck a partnership deal with no less a company than McDonald's(NYSE: MCD). The arrangement will see McDonald's use Oatly's plant-based milk alternative as a selection for its McCafe beverages in Austria.
Oatly and McDonald's have been partners for some time, meanwhile Austria -- a small Central European nation home to fewer than 9 million people -- is a relatively limited market. So investors are taking this new deal as an indication of the restaurant giant's increasing trust (and perhaps reliance) on Oatly.
It's also apparent that this is a pilot project, which given the popularity of sustainable food and drink options in Europe, should be successful.
Now what
This adds to the generally bullish momentum behind Oatly's business of late. Yes, the company reamins unprofitable (heavily so, at times), but recently it was thrown a financial lifeline with the issuance of $300 million worth of convertible notes and the securing of a $125 million term loan.
Meanwhile, if the McDonald's collaboration starts to snowball and Oatly's liquids become commonplace options in big-market McCafes, the company's future could get a lot brighter. That's not only because of the direct patronage of the Golden Arches. As a longtime leader in the fast-food (not to mention coffee) space, its example is often followed by many other franchise and chain operators.
It's no wonder, then, that investors are starting to feel like Oatly is standing in front of some long-term opportunities with very high potential.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
