Shares of Celsius Holdings plunged 15.6% in pre-market trading to $24.59 ahead of its second-quarter earnings report scheduled for August 6, as investors rushed to reposition around a stock that had been priced for near-flawless execution. Celsius Shares Plunge 18% After Flagship Brand Sales Shrink — Is the Energy Drink Darling Now an Acquisition-Dependent Growth Story?
Shares of Celsius Holdings cratered as much as 18.5% on August 6 after the energy drink maker delivered a second-quarter earnings report that missed Wall Street targets on both the top and bottom lines, exposing a troubling gap between headline growth and the health of its core brand.
• Revenue Missed by $52 Million, and Most of the Growth Came From an Acquisition
Second-quarter revenue increased 10.6% to $817.9 million, but it fell well short of analysts' expectations of $870 million. Dig beneath the surface and the picture darkens: revenue climbed by $78.7 million, with $66.5 million of that boost coming from the acquired Rockstar brand — roughly 85% of the total increase.
Without Rockstar, overall group sales increased just 1.6%. For shareholders, this means the headline growth rate is almost entirely stitched together by last year's deal, not organic demand.
• The Flagship Brand Is Shrinking, Not Growing
The namesake CELSIUS brand — still about 55% of total sales — saw revenue decline roughly 11.7%.
CEO John Fieldly admitted the company "went too deep" on cutting CELSIUS product varieties , a portfolio cleanup that backfired by removing too many options from store shelves. New cold-case placements and retail fixtures are expected to come online in late Q3 and Q4 , but that means the drag persists for at least another quarter.
• Margins Are Compressing Under Cost Pressure
Gross margin fell to 48.1% from 51.5% a year ago, a 340-basis-point drop — meaning the company kept less of every dollar of sales. Adjusted earnings per share fell 23% to $0.36 , missing the consensus estimate of $0.43.
Management guided for gross margins to stay in the "high 40s" next quarter , signaling no quick relief from rising aluminum and fuel costs.
• Analysts Are Slashing Targets; One House Already Downgraded
Deutsche Bank recently cut its price target to $39 from $44 , and Stifel lowered its target to $45 from $62 . Maxim downgraded the stock outright from Buy to Hold. Even after the selloff, the stock trades at a price-to-earnings ratio of roughly 67 times — a premium that assumes robust growth the core brand is no longer delivering. Until CELSIUS-brand sales stabilize, investors are effectively paying a growth-stock price for an acquisition-fueled conglomerate.