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What: Shares of energy-drink maker Monster Beverage (NASDAQ:MNST) tumbled as much as 18% following news that it was being sued by the family of a 14-year-old girl who drank Monster Energy drinks and subsequently died.
So what: According to claims in the lawsuit, Monster failed to properly disclose the dangers of its product. Anais Fournier died in December 2011 from caffeine toxicity after drinking two 24-oz. cans of Monster Energy on consecutive days. In a separate press release from the family's law firm released on Friday, it noted that six deaths and 15 hospitalizations have been associated with Monster Energy since 2009.
Now what: Although this is merely one lawsuit and Monster is innocent until proven guilty, the prospect for regulatory action against energy-drink makers is a topic I've pressed upon numerous times in the past. In addition to being subject to potential industry regulations, energy-drink makers like Monster Beverage aren't priced attractively, either. Even down more than 40% from its 52-week highs, Monster is still trading at 19 times forward earnings. Similar to the tobacco industry, which faces increasing regulatory scrutiny, I see the energy-drink sector facing the same fate, and I'd consider steering clear of Monster Beverage in the meantime.
Craving more input? Start by adding Monster Beverage to your free and personalized Watchlist so you can keep up on the latest news with the company.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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