Volatility at Celsius: Another Year Full of Challenges for Energy Specialists

The stock markets are experiencing an impressive year with the S&P 500 rising by 28%, building on the previous year's success with an increase of 24%. However, despite the optimistic market sentiment, not all companies remain untouched by this momentum. A prominent example is the company Celsius, known for its innovative energy drinks. In 2024, the company's stock price fell by a substantial 45%. For investors considering an entry, these circumstances might appear enticing. Yet, there are some essential points to consider. The beverage market is highly competitive, especially in the energy drink segment, where giants like Red Bull and Monster Beverage dominate. Celsius positioned itself as a leading brand in the segment of healthy and functional energy drinks without sugar, capturing an 11.8% market share, thereby rising to the third most popular brand. In recent years, the company's sales dramatically increased, particularly between 2018 and 2023, where the business grew 25-fold. However, competition from established brands and new challengers like Zoa and Alani Nu could increasingly pressure Celsius to maintain its unique market position. Although Celsius shone with impressive sales growth in the past, the company recorded "only" a 29% year-over-year increase for the first six months of 2024. A sign of inevitable normalization? Perhaps. More alarming is the 31% revenue reduction in the third quarter compared to the previous year. A critical point was the decision by PepsiCo, Celsius's main distribution partner, to drastically reduce ordered quantities due to inventory surplus. This measure, according to Celsius CFO Jarrod Langhans, led to a revenue decline of 124 million USD. The management is confident that the situation will stabilize. However, the challenge remains to find a balance between adequate inventory management and fluctuating consumer trends.