Celsius Holdings Faces 70% Share Decline Amid Rising Costs

Celsius Holdings sees shares drop 70% over the year, mainly due to slowing revenues and rising costs. The latest report indicates challenges in the energy drink sector, questioning the stock's premium valuation.

Date: 04-03-2025

AI Rating: 4

Earnings Performance and Revenue Growth: Celsius Holdings reported a decline in adjusted earnings per share, which fell by 18% year over year to 14 cents. This decline indicates a significant drop in profitability and suggests that the company's earnings are under pressure. Furthermore, net revenues fell by about 4%, highlighting a slowdown in revenue growth and momentum compared to its historical performance.

Profit Margins and Cost Management: The report notes that rising costs and promotional spending have affected profitability. Specifically, SG&A expenses surged 73% year over year, primarily driven by increased legal expenses, restructuring costs, and penalties paid to co-packers. This surge raises concerns about the company’s ability to manage its costs effectively, which may hinder future performance.

Market Competitive Forces: Celsius Holdings faces heightened competition in the energy drink space as major players like Monster Beverage and Red Bull are aggressively launching sugar-free products. This added pressure could impact Celsius's market share and its ability to sustain healthier profit margins.

Macroeconomic Considerations: Broader economic pressures, including shifts in consumer preferences and reduced discretionary spending, further complicate Celsius's operational environment. This could lead to declining sales and additional difficulties in maintaining profitability.

Long-Term Growth Potential: Despite the current challenges, Celsius Holdings benefits from several strategic strengths. Its innovative product lines and extensive retail presence may help the company recover in the long run. Furthermore, its expansion into international markets reflects a proactive approach to diversifying its revenue streams and reducing reliance on the North American market.

Stocks: CELH PEP MNST