Study of CELH
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An investment thesis for Celsius Holdings, Inc. (CELH), maker of Celsius energy drinks, would consider its financial performance, growth drivers, and potential risks. Here’s a detailed breakdown:
1. Company Overview
- Product Line: Celsius offers functional energy drinks with no sugar, preservatives, or artificial ingredients. Positioned as a healthier alternative to traditional energy drinks.
- Market Position: Rapidly gaining market share against industry giants like Red Bull and Monster Energy.
- Target Demographic: Health-conscious consumers, fitness enthusiasts, and younger generations.
2. Investment Thesis Summary
Celsius is well-positioned to capture a growing market segment in the energy drinks industry, driven by increasing demand for healthier and functional beverages. With strong brand momentum, strategic partnerships (like PepsiCo), and significant room for domestic and international expansion, CELH represents a compelling growth opportunity.
3. Growth Catalysts
a. Health & Wellness Trends
- Rising consumer preference for low-sugar, clean-label beverages.
- Celsius taps into the intersection of energy drinks and the functional health beverage market, a rapidly expanding segment.
b. Strategic Partnership with PepsiCo
- In 2022, Celsius partnered with PepsiCo for distribution, granting CELH access to Pepsi’s massive distribution network.
- This expands Celsius’ reach in retail, convenience stores, and internationally.
c. Strong Revenue Growth
- Celsius has posted explosive revenue growth year over year (e.g., +95% YoY in Q4 2023).
- Expanding profit margins due to economies of scale and stronger pricing power.
d. Market Share Opportunity
- Currently, Celsius holds a small but growing share of the $60+ billion global energy drink market.
- Competing with Monster and Red Bull while appealing to younger, health-focused consumers.
e. International Expansion
- Recent launches in Canada, Europe, and plans for expansion into Asia can drive long-term growth.
4. Financial Highlights
- Revenue Growth: 5-year CAGR of ~65% (one of the fastest in the sector).
- Gross Margins: Improved to ~45%-50%.
- Profitability: Moving from loss to consistent positive earnings.
- Debt-Free: Strong balance sheet, no significant debt.
5. Risks to Consider
- Valuation: CELH trades at a high P/E and P/S ratio compared to peers, reflecting significant growth expectations.
- Competition: Aggressive competition from established brands like Red Bull, Monster, and new market entrants.
- Execution Risk: The PepsiCo partnership must scale effectively.
- Market Saturation: U.S. energy drink market growth could slow, requiring international success.
6. Conclusion
Celsius Holdings (CELH) presents a high-growth investment opportunity in the energy drink market. Backed by strong health-conscious trends, a strategic PepsiCo partnership, and rapid market expansion, CELH has the potential to become a dominant player. However, its premium valuation requires continued execution and revenue growth to justify further upside.
Investor Profile: Suitable for growth-focused investors willing to accept volatility in exchange for significant upside potential.
Would you like to dive into more specific financial metrics, valuation analysis, or a comparison to competitors like Monster (MNST)? Let me know!
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Celsius Holdings, Inc. (CELH) has demonstrated remarkable growth in the energy drink sector, positioning itself as a formidable competitor to established brands like Monster Beverage Corporation (MNST). Here’s a comparative analysis of their financial metrics and valuations:
1. Revenue and Growth
- Celsius Holdings (CELH):
- In Q4 2023, Celsius reported record revenue of $347 million, a 95% increase from $178 million in Q4 2022.
- The full-year 2023 revenue reached $1.318 billion, up 102% from $654 million in 2022.
- Monster Beverage (MNST):
- In Q2 2024, Monster reported revenue of $1.9 billion, a 2.5% year-over-year increase.
2. Profitability
- Celsius Holdings:
- Achieved a gross margin of 49.05%.
- Net profit margin stands at 13.52%.
- Monster Beverage:
- Reported a net income of $425.4 million in Q2 2024, up from $413.9 million the previous year.
3. Valuation Metrics
- Price-to-Earnings (P/E) Ratio:
- Celsius: 45.06
- Monster: 29.40
- Price-to-Sales (P/S) Ratio:
- Celsius: 5.83
- Monster: 7.78
4. Market Capitalization
- As of December 13, 2024:
- Celsius: Approximately $7.19 billion
- Monster: Approximately $54 billion
5. Stock Performance
- Celsius Holdings:
- Year-to-date return: -41.32%
- 52-week high: $99.61
- 52-week low: $25.23
- Monster Beverage:
- 52-week high: $58.08
- 52-week low: $50.10
6. Growth Prospects
- Celsius Holdings:
- Projected EPS growth over the next 3-5 years: 40.9%
- Strategic partnership with PepsiCo enhances distribution and market reach.
- Monster Beverage:
- Projected EPS growth over the next 3-5 years: 16.8%
- Established global presence with a diverse product portfolio.
Conclusion
Celsius Holdings exhibits higher growth rates and operates at a premium valuation compared to Monster Beverage. Its strategic partnerships and focus on health-conscious consumers position it well for future expansion. However, the elevated valuation multiples suggest that investors are pricing in substantial growth expectations. Conversely, Monster Beverage offers stable growth with a more established market presence and comparatively lower valuation multiples.
Investor Considerations
- Celsius Holdings:
- Appealing to growth-oriented investors seeking exposure to emerging brands with significant expansion potential.
- Higher volatility and valuation risk due to aggressive growth assumptions.
- Monster Beverage:
- Suitable for investors favoring established companies with consistent performance and lower volatility.
- Potentially limited upside compared to high-growth competitors.
Investors should assess their risk tolerance and investment objectives when choosing between these two companies.
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On May 28, 2024, Celsius Holdings, Inc. (CELH) experienced a significant stock price decline, dropping approximately 17% by midday.
This downturn was primarily attributed to new Nielsen data indicating a sequential slowdown in sales growth. For the week ending May 18, 2024, Celsius reported a 39% sales growth rate, slightly up from the 37% growth in Q1 2024. However, the company’s market share dipped from 10.8% to 10.5%.
Additionally, a Morgan Stanley analyst expressed concerns about potential deceleration in Celsius’s growth as the initial benefits from its distribution partnership with PepsiCo began to wane.
These factors collectively led to investor apprehension, resulting in the notable stock price decline on that date.
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In 2024, Celsius Holdings, Inc. (CELH) experienced a significant stock price decline, influenced by several key factors:
1. Inventory Adjustments by Major Distributor
PepsiCo, Celsius’s primary U.S. distributor, reduced its orders to optimize inventory levels. This led to a substantial revenue decline, with Q3 2024 revenues dropping 31% year-over-year to $265.7 million.
2. Deceleration in Sales Growth
After a period of rapid expansion, Celsius’s sales growth began to slow. For instance, sales growth decelerated to 39% for the week ending May 18, 2024, down from previous rates.
3. Increased Market Competition
The energy drink market became more competitive, with established brands like Red Bull and Monster Beverage intensifying their efforts. This heightened competition pressured Celsius’s market share and growth prospects.
4. Analyst Downgrades and Revised Forecasts
Financial analysts adjusted their outlooks due to the aforementioned challenges. For example, Bank of America downgraded Celsius’s stock, citing concerns over future sales growth.
These factors collectively contributed to investor concerns, leading to a significant decline in CELH’s stock price throughout 2024.
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John Fieldly serves as the Chairman, President, and Chief Executive Officer (CEO) of Celsius Holdings, Inc., a company renowned for its fitness and energy beverages. He assumed the CEO role in April 2018, following his tenure as Chief Financial Officer (CFO) from 2012.
Professional Background:
- Chief Financial Officer (2012–2017): Fieldly joined Celsius Holdings as CFO in 2012, during a period when the company faced significant financial challenges, including cash burn and operational inefficiencies.
- Interim CEO and CFO (2017–2018): In 2017, he took on the dual role of interim CEO and CFO, leading the company through a critical phase of restructuring and strategic realignment.
- Chief Executive Officer (2018–Present): Appointed as CEO in April 2018, Fieldly has been instrumental in driving the company’s growth, expanding its market presence, and enhancing operational efficiency.
Achievements Under His Leadership:
- Revenue Growth: Under Fieldly’s leadership, Celsius Holdings experienced substantial revenue growth, surpassing $1.3 billion in annual revenue in 2023.
- Strategic Partnerships: In 2022, Fieldly orchestrated a significant distribution partnership with PepsiCo, which played a pivotal role in expanding Celsius’s market reach and distribution capabilities.
- Market Expansion: He has overseen the company’s expansion into international markets, broadening its global footprint and establishing Celsius as a prominent player in the energy drink sector.
Personal Interests:
Beyond his professional endeavors, Fieldly is committed to wellness and fitness, aligning with the company’s brand ethos. He enjoys outdoor activities such as fishing, cycling, and recreational soccer, reflecting his dedication to a healthy lifestyle.
Under John Fieldly’s stewardship, Celsius Holdings has transformed from a company facing financial difficulties into a leading entity in the energy drink market, achieving significant milestones and establishing a robust market presence.
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As of December 2024, insider ownership in Celsius Holdings, Inc. (CELH) is approximately 6.4%, equating to about 14.925 million shares.
Key Insider Shareholders:
- Carl DeSantis: Holds 107.92 million shares, representing 45.92% of the company.
- William H. Milmoe: Owns 61.49 million shares, accounting for 26.16% of the company.
- Dean DeSantis: Possesses 42.54 million shares, or 18.10% of the company.
These figures indicate that insiders collectively own a substantial portion of Celsius Holdings, aligning their interests with those of external shareholders.
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As of September 13, 2024, John Fieldly, the CEO of Celsius Holdings, Inc. (CELH), directly owned approximately 1,261,069 shares of the company’s common stock.
In September 2024, Fieldly sold a total of 626,268 shares over two days:
- September 12, 2024: Sold 74,847 shares at an average price of $32.80 per share.
- September 13, 2024: Sold 551,421 shares at an average price of $34.36 per share.
These transactions amounted to approximately $21.4 million in total proceeds.
It’s important to note that insider shareholdings can change due to ongoing transactions. For the most current information, refer to the latest filings with the U.S. Securities and Exchange Commission (SEC).
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As of now, there is no publicly available information detailing the specific reasons behind John Fieldly’s recent stock sales. It’s important to note that executives may sell shares for various personal or financial reasons, which may not necessarily reflect their outlook on the company’s future performance. For the most accurate and up-to-date information, it’s advisable to consult official filings with the U.S. Securities and Exchange Commission (SEC) or statements directly from the company.
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Carl DeSantis was a distinguished American entrepreneur and philanthropist, renowned for his significant contributions to the health and wellness industry. Born in July 1939 in Massachusetts and raised in Miami Beach, Florida, he began his career at Walgreens, becoming one of the company’s youngest store managers.
In 1976, DeSantis founded Sundown Vitamins, operating initially from his garage. He later acquired the rights to the Rexall name in 1985, rebranding his company as Rexall Sundown. Under his leadership, Rexall Sundown became a leading manufacturer of vitamins and nutritional supplements, going public in 1993 and employing over 1,500 people at its peak.
In 2000, he sold the company to Royal Numico for $1.8 billion.
Following the sale, DeSantis continued his entrepreneurial ventures through CDS International Holdings, Inc., investing in various industries, including real estate, hospitality, and consumer products. Notably, he was an early investor in Celsius Holdings, Inc., contributing to its growth into a prominent energy drink brand.
DeSantis was also dedicated to philanthropy, supporting educational institutions such as Florida State University, Florida Atlantic University, and Nova Southeastern University. His contributions earned him numerous accolades, including an honorary doctorate from Florida State University and induction into the Nova Southeastern University Business Hall of Fame.
Carl DeSantis passed away on August 10, 2023, at the age of 84, leaving behind a legacy of innovation and generosity.
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William H. Milmoe is a seasoned financial executive and certified public accountant with extensive experience across various industries. His notable roles include:
- President and Chief Financial Officer at CDS International Holdings, Inc.: Since 2006, Milmoe has led this private investment firm, overseeing the business investments and holdings of the late Carl DeSantis.
- Co-Chairman of the Board at Celsius Holdings, Inc.: Milmoe served as Co-Chairman until August 2021, contributing to the company’s growth in the energy drink sector.
- Board Member at Integrated BioPharma, Inc.: He holds a directorship at this company, which focuses on health and wellness products.
Milmoe’s financial career includes positions with PricewaterhouseCoopers and General Cinema Corporation, an independent bottler of Pepsi-Cola products and movie exhibitor.
In addition to his corporate roles, Milmoe is a director of the Carl Angus DeSantis Foundation, continuing the philanthropic legacy of Carl DeSantis.
His extensive experience in financial management and strategic leadership has been instrumental in the growth and success of the organizations he has been associated with.
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Dean DeSantis is a prominent American entrepreneur and investor, recognized for his significant contributions to the health and wellness industry. He is the son of the late Carl DeSantis, the founder of Rexall Sundown, a leading vitamin and nutritional supplement company.
Professional Background:
- Celsius Holdings, Inc.: Dean DeSantis is a major shareholder in Celsius Holdings, Inc., a company specializing in fitness and energy beverages. His substantial investment has been instrumental in the company’s growth and market presence.
- CDS International Holdings, Inc.: Following in his father’s entrepreneurial footsteps, Dean DeSantis has been involved with CDS International Holdings, Inc., a private investment firm managing a diverse portfolio across various industries, including real estate, hospitality, and consumer products.
Philanthropy:
Continuing his family’s legacy of philanthropy, Dean DeSantis supports various charitable initiatives, particularly in education and healthcare, reflecting a commitment to community development and well-being.
Through his business ventures and philanthropic efforts, Dean DeSantis upholds the entrepreneurial spirit and dedication to societal betterment established by his father.
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As of November 30, 2024, Celsius Holdings, Inc. (NASDAQ: CELH) had approximately 27.42 million shares sold short, representing about 11.67% of its outstanding shares.
The short interest ratio, or days to cover, stood at 3.2 days, indicating it would take this duration for short sellers to cover their positions based on the average daily trading volume of 6.16 million shares.
Monitoring short interest is crucial, as significant changes can signal shifts in investor sentiment and potential stock price volatility.
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As of August 2024, Celsius Holdings, Inc. held approximately 11% of the U.S. energy drink market, which is valued at around $19 billion.
This positions Celsius as the third-largest energy drink brand in the United States, following industry leaders Red Bull and Monster Beverage Corporation.
The company’s market share has been on an upward trajectory, driven by its focus on health-conscious consumers and strategic partnerships, such as the 2022 distribution agreement with PepsiCo.
This growth reflects Celsius’s alignment with consumer trends favoring healthier beverage options and its effective expansion strategies.
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As of December 13, 2024, Celsius Holdings, Inc. has not announced any recent stock buyback programs. The company’s capital allocation strategy appears to focus on growth initiatives rather than share repurchases. For the most current information on Celsius Holdings’ stock buyback activities, it’s advisable to consult the company’s official investor relations communications or recent financial statements.
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As of December 13, 2024, institutional investors hold approximately 62.89% of Celsius Holdings, Inc. (NASDAQ: CELH) shares.
Major Institutional Shareholders:
- Vanguard Group Inc.: Approximately 5.37% ownership, equating to 7.44 million shares.
- BlackRock Inc.: Holds about 3.07 million shares.
- Capital International Investors: Owns around 2.95 million shares.
These institutional holdings indicate significant confidence in Celsius Holdings’ growth prospects. However, such substantial institutional ownership can also lead to stock price volatility if large shareholders adjust their positions.
For the most current information, it’s advisable to consult the latest SEC filings or the company’s investor relations page.
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In 2024, insiders of Celsius Holdings, Inc. (NASDAQ: CELH) engaged in significant stock sales. Notable transactions include:
- March 4, 2024:
- Dean DeSantis: Sold 4,000,000 shares at an average price of $67.46, totaling approximately $269.8 million.
- Deborah DeSantis: Also sold 4,000,000 shares at the same price, amounting to about $269.8 million.
- John Fieldly (CEO): Sold 119,604 shares at an average price of $85.07, totaling around $10.17 million.
- September 12-13, 2024:
- John Fieldly: Sold a combined 626,268 shares over two days, with an average price of approximately $34.17 per share, resulting in total proceeds of about $21.4 million.
These transactions are part of a broader pattern of insider sales over the past two years, where insiders sold a total of 9,270,065 shares, amounting to approximately $439.2 million.
It’s important to note that insider sales can occur for various reasons, including personal financial planning or portfolio diversification, and do not necessarily reflect the individual’s outlook on the company’s future performance. For the most current and detailed information, consulting the company’s filings with the U.S. Securities and Exchange Commission (SEC) is recommended.
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In 2024, Celsius Holdings, Inc. (CELH) insiders engaged in substantial stock sales, totaling approximately $1.4 billion. These transactions have raised questions among investors and have become a focal point in recent legal proceedings.
Legal Allegations:
A class-action lawsuit alleges that Celsius Holdings made misleading statements about its business prospects, resulting in an artificially inflated stock price. This purported inflation allegedly enabled certain officers, directors, and insiders to sell over 21.6 million shares, reaping more than $1.4 billion. The complaint suggests that these insiders capitalized on the elevated stock prices, potentially at the expense of other shareholders.
Understanding Insider Sales:
Insiders may sell shares for various reasons, including personal financial planning, tax obligations, or portfolio diversification. However, when such sales coincide with allegations of misleading corporate statements, it can lead to concerns about the motivations behind these transactions and the overall health of the company.
Implications for Investors:
The significant insider selling, coupled with the legal allegations, has contributed to increased scrutiny of Celsius Holdings’ corporate governance and transparency. Investors are advised to monitor ongoing legal developments and assess the company’s disclosures to make informed decisions.
For the most current information, consulting the company’s official communications and regulatory filings is recommended.
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Celsius Holdings, Inc. has faced several legal challenges in recent years, primarily concerning allegations of misleading business practices and securities law violations.
1. Class Action Lawsuits:
- Misleading Product Labeling (2023): A class-action lawsuit was filed against Celsius Holdings, alleging that the company falsely advertised its energy drinks as containing “no preservatives,” despite the presence of citric acid, which can act as a preservative. This case was settled in 2023, with the company agreeing to a $7.8 million settlement to compensate affected consumers.
- Securities Fraud Allegations (2024): In December 2024, multiple law firms, including The Schall Law Firm and The Gross Law Firm, initiated class-action lawsuits against Celsius Holdings. These suits allege that between February 29, 2024, and September 4, 2024, the company issued materially false and misleading statements regarding its business prospects. The complaints claim that such actions artificially inflated the company’s stock price, enabling insiders to sell over 21.6 million shares, garnering more than $1.4 billion.
2. Allegations of Overselling Inventory:
In September 2024, during the Barclays 17th Annual Global Consumer Staples Conference, Celsius Holdings’ CEO, John Fieldly, disclosed that the company had oversold inventory to its distributor, PepsiCo, by approximately $100 million to $120 million. This revelation indicated that PepsiCo was holding several million more cases than necessary, leading to a significant reduction in future orders. Following this disclosure, Celsius’ stock price declined by about 12%.
3. Impact on Investors:
These legal issues have raised concerns among investors regarding the company’s transparency and governance practices. The allegations of misleading statements and insider trading have led to increased scrutiny and legal actions aimed at recovering investor losses.
It’s important to note that these cases are ongoing, and the outcomes remain pending. Investors and stakeholders are advised to monitor official communications from Celsius Holdings and legal proceedings for the most current information.
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Yes, Monster Beverage Corporation (NASDAQ: MNST) has actively engaged in stock repurchase programs in 2024:
- May 2024: The company initiated a $3 billion modified “Dutch auction” tender offer, repurchasing approximately 56.6 million shares at $53 per share, representing about 5.4% of its outstanding stock.
- August 2024: The Board authorized an additional $500 million share repurchase program to further reduce the number of outstanding shares.
These buyback initiatives reflect Monster Beverage’s commitment to returning value to shareholders and indicate confidence in the company’s financial health.
