In the last five years, the Nasdaq Composite Index has seen a substantial growth of 123%, averaging an annual gain of 17.4%. However, the beverage company Celsius has significantly outperformed the index, with its stock soaring by an astonishing 6,290%, turning a $10,000 investment into $640,000. Despite a slowdown in the first quarter of 2024, where revenue grew by 37% compared to the previous year’s 102%, the company’s stock has risen 22% since the financial update on May 7.*
Performance of Celsius Holdings, Inc. stock over 5 years. Source: Tradingview.com
Celsius’s success can be attributed to several factors, including its positioning as a health-conscious energy drink with natural ingredients and no sugar, appealing to the growing health and wellness trend. Additionally, the energy drink market has been robust, growing by 9% annually since 2018, now valued at $44 billion globally. Unlike soft drinks, which are declining in the U.S., energy drinks continue to see strong demand.
Strategic moves like expanding distribution networks and partnering with PepsiCo for enhanced market penetration have proven effective. Celsius’s presence has expanded into various retail settings, including unusual venues like restaurants and gaming locations. Online sales, particularly on Amazon, have also seen significant growth.
Despite its rapid growth and profitability—with net income surging 89% due to reduced costs and an expanded gross margin from 43.8% to 51.2%—Celsius’s stock is deemed too risky to buy at its current price-to-earnings ratio of 103. This valuation anticipates nearly perfect management execution moving forward, leaving no margin for error. Potential investors might consider waiting for a substantial price drop before investing in Celsius shares.
- Past performance is no guarantee of future results.
This text represents a marketing message. It does not constitute any form of investment advice or investment research or an offer to engage in any transactions in financial instruments. Its content does not take into account the readers' individual circumstances, experience or financial situation. Past performance is not a guarantee or prediction of future results.
