What Monster Beverage Investors Should Do Now

Tragic news coming from Monster Beverage (Nasdaq: MNST  ) today, as it receives backlash over allegations that its products have led to health issues and, in some cases, death. The company now faces an FDA investigation and potential lawsuits and has lost a reported $3.5 billion in market cap within the past two days. This shouldn't become as big as the tobacco lawsuits from a few years ago, but Blake cautions that no matter how the chips fall, there is a huge risk of market-share loss, and that's something investors need to weigh in their risk calculations.

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Editor's note: A previous version of the text above indicated a comparison to tobacco lawsuits that was incorrect. The Fool regrets the error.

Blake Bos, Isaac Pino, and The Motley Fool have no positions in the stocks mentioned above. Motley Fool newsletter services recommend Coca-Cola, Lorillard, and Monster Beverage. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On October 23, 2012, at 9:39 PM, psytrader wrote:

    Ok, I have no clue what lawsuit against Monster Energy you guys are talking about. So far, there has been only ONE lawsuit filed by the family of the 14 year old girl who died of her heart condition after drinking Monster. If she drank only 1 24 oz can of Monster on two separate days, that means she only ingested 240 mg of caffeine on each day, which is not remotely close to caffeine toxicity levels. No mention has been made of what other sources of caffeine(soda, coffee, tea, chocolate) she may have ingested over that 2 day period. Monster plans to vigorously defend itself against this suit. The company has stated that this is the first suit of its kind brought against the company and nobody else has sued, including over the 4 other alleged Monster-related deaths.

    I think you it's unwise and irresponsible of you to even mention Monster Energy and Big Tobacco in the same sentence. Cigarettes have killed millions of people in a direct cause and effect relationship whereas there is no proof or link whatsoever that the caffeine contained in Monster Energy drinks has caused serious harm to anyone. There will be no multi-billion or even mutli-million dollar lawsuits against the company. They've sold over 8 billion cans of energy drink with nobody ever filing a suit against them until now. Sad to hear about the girl but there were warning labels on the can and her doctors should have warned her against caffeine consumption. How can Monster possibly be blamed for this?

    Looks like the fear of mega lawsuits, which you two are helping to perpetuate, was the reason why the stock got panic sold over the last two days but I expect the shares to significantly rebound once the truth is revealed and cooler heads prevail.

  • Report this Comment On October 24, 2012, at 10:35 AM, Medicalrecordman wrote:

    Blake, here's what I wrote earlier today in response to your fellow MF contributor and his analysis ....

    Chris, sorry buddy, but you're clueless on this new issue involving 5 potential deaths. Whether Monster is responsible for their deaths or not, this is the beginning of the end for the company. That story made national headlines and every parent and their dog will now restrict their kid from drinking Monster drinks. Nice short covering bounce here this morning, but will REAL buyers step in now ? Not a chance on earth. Watch and learn .... and I'm still LOL at your analysis. You must be a rather young guy with not a whole lot of real world experience.

  • Report this Comment On October 24, 2012, at 6:34 PM, JungleGent wrote:

    @Medicalrecordman: Since when the average teenager listens to his/her parents? If Monster drinks are considered "dangerous", those youngsters will like to consume them even more. No warning labels or concerned parents can stop them. Unless energy drinks are prohibited from being sold to minors (which I seriously doubt will ever happen).

    I'm as REAL an investor with at least as much experience as you, and I bought a whole bunch of MNST yesterday.

    Too many Americans take no personal responsibility; they instead look for others to blame. The dead girl had a known heart illness. Yet her doctor and her parents never warned her about consuming large quantity of caffein. Now, they sue the energy drink. And they scared the "medical" man!

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