Down 67%, Is This (Once) Trendy Energy Drink A Buying Opportunity or a Toxic Mistake?

Let’s talk about the drink that got me through the 2020 lockdown—Celsius. You know, the trendy, “healthy” energy drink that everyone suddenly had in their hand. Just two years ago Pepsi dropped $550 Million for a 8.5% stake Celsius Holdings, betting big on the brand’s cool, health-conscious vibe. That investment sent Celsius stock soaring, and now the company’s worth over $7 billion.

Since its market debut in 2017 Celsius has been bubbling up explosive growth for investors. They quickly became the third largest energy drink brand behind Red Bull and Monster in a $21 Billion a year space in the US. Early on, they hitched their wagon to Olympian Shaun White and YouTuber Jake Paul—yeah, the guy who claims to be a boxer but mostly throws hands with folks who qualify for senior discounts. Somehow, this helped Celsius’ stock skyrocket by a wild 6,290% in the last five years.

But lately, it seems like the fizz is going flat. The company's shares have hit the wall, plummeting 67% from their highs earlier this year and 16% in the last week alone. The reason? Pepsi’s decision to slow down orders, which has raised some eyebrows and caused investors to hit the SELL button. But before writing Celsius off, let’s dive deeper to see if this could be a buying opportunity in disguise.

Let’s start with the obvious problem here: Pepsi is Celsius’ primary distributor and a minority shareholder who massively over-ordered inventory. (Isn’t there an excel spreadsheet for that type of thing?) Anyways, in a bid to ensure that Celsius drinks were available everywhere from 7 Eleven to Dollar General, Pepsi ended up stockpiling too much of the good stuff. Now, they’ve scaled back, cutting orders by a hefty $120 million for Q3, which is a big blow considering Pepsi accounts for 59% of Celsius’ revenue.

Despite the cutback in orders, Celsius continues to show they can take a hit and get back up. Sales at retail stores have grown by 10% in Q3, according to Circana data. That's 10 times the growth rate of the overall energy drink market! So, while Pepsi may be pulling back, consumer demand date shows folks are still addicted to Celsius drinks.

To keep its momentum going, Celsius is getting even more creative with its marketing. They’ve inked deals with Ferrari and Major League Soccer to boost their brand presence. But what really stands out is their new partnership with six Heisman hopefuls under NIL deals, calling it the “ESSENTIAL Six.” These rising college football stars bring massive social media clout, and Celsius is banking on them to connect with a younger, fitness-focused crowd. This could be key to cementing its place as the go-to “healthy” energy drink for people serious about their performance—whether they’re athletes or just trying to survive Monday mornings.

So, what’s the takeaway for investors? Well, for starters, Celsius is proving it’s not just a one-hit wonder relying on Pepsi. The company has increased its market share by 1% over the past year, despite a slowdown in the overall energy drink market. Plus, they’re expanding internationally into Canada, Australia, and Europe—opening up fresh growth opportunities that could make today’s $9 billion valuation look like a bargain down the line.

And while Celsius stock might not be cheap at 32 times earnings, it’s starting to look a lot more attractive after this recent dip. Analysts are optimistic, forecasting a 24.1% annual earnings growth over the next three to five years.

Remember, energy drinks are on fire right now, and “functional beverages” like Celsius are the cool kids in the drink aisle. Experts say the energy drink category will reach $21 Billion by 2026. With its stock price beaten down and a market still craving growth-focused energy drinks, Celsius could be a tempting play for anyone ready to bet on a high-risk, high-reward opportunity.

Sure, it’s about as risky as betting on Fantasy Football, but as Celsius works through its inventory drama with Pepsi and stretches its reach overseas, those who are brave enough to buy the f!@#$ing dip could end up holding a winning ticket.

But, but, but…

While Celsius and Pepsi are caught up in a $120 million inventory mess, our Stocks.News alert on Wednesday popped off with a +162.08% gain in less than 24 hours. And guess what? Our premium members didn’t just sit on the sidelines—they cashed in big time. Oh, and by the way, that was our fifth triple-digit winner in a row. Yeah, we’re on a serious hot streak.

So, why waste time watching Celsius and Pepsi sort out their drama when Stocks.News premium members are locking in explosive gains week after week?

Do the math, and if you’re feeling the momentum, upgrade to Stocks.News premium before the next alert drops—it’s looking like another big winner.

Until next time, stay sharp and keep stacking those gains.

Stocks.News holds positions in Pepsi, Celsius, and Monster.