Explaining the $100+ million reason Celsius is dropping.
Celsius Holdings' stock price has dropped 70% due to high expectations and a recent slowdown in growth, despite strong market trends for health-focused energy drinks. The partnership with PepsiCo has boosted sales and margins but created dependency and uncertainty, as Pepsi's initial large orders have led to stockpile issues. Celsius remains nearly debt-free with growing free cash flow and improving margins, making it a potential takeover target in my view, particularly by PepsiCo.
Celsius ( CELH ) has been one of the hottest beverage stocks in recent years, driven by its strong brand presence in the energy drink market and rapid revenue growth. However, after a very significant rally over the past several years, the stock has taken a hard hit, plunging nearly 70% in the last three months.
PepsiCo ordered too much inventory from Celsius early on in the pair's distribution partnership. Now the beverage giant is recalibrating how much inventory it needs, which has meant a significant pullback in orders.
Celsius has shed two-thirds of its value since its May high. The functional beverage company warned that sales to its primary distributor would decline in the current quarter.
Pepsi distributes products for Celsius. It overstocked inventory in 2023.
The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price.
Celsius Holdings sells energy drinks and has been a hot brand among consumers in recent years. PepsiCo sells a range of drinks, snacks, and food items and has been an even more attractive stock to own than Celsius.
Celsius Holdings' business has slowed dramatically in just the past year. That slowing growth rate has prompted a sell-off in the once-hot stock.
Zacks.com users have recently been watching Celsius (CELH) quite a bit. Thus, it is worth knowing the facts that could determine the stock's prospects.
Celsius' stock has dropped nearly 60%, but the company still shows strong growth potential, especially with a 23% revenue increase and 37% retail sales growth. The current challenges are mainly due to temporary inventory adjustments by Pepsi and reduced convenience store foot traffic, not fundamental issues with Celsius. Non C-Store channels like Amazon and club stores show robust growth, indicating the brand's strength and potential for recovery.
Celsius' stock tumbled as investors fretted over its slowing growth. But it's still growing and has plenty of ways to expand its business.