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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of energy-drink maker Monster Beverage (Nasdaq: MNST ) continued their slide for the second straight day, down as much as 12%, following negative news from the FDA and Goldman Sachs.
So what: One factor driving the maker of Monster Energy lower is the fact that Goldman Sachs removed Monster Beverage from its "conviction buy" list. That was perpetuated by confirmation today that the Food and Drug Administration is investigating reports of deaths associated with consumers who drank Monster Energy. The scope of the FDA's investigation dates back to 2004 and will focus on the safety of the highly caffeinated energy drink. Monster Beverage denies all allegations that its energy drink is responsible for consumers' deaths.
Now what: It's almost like you can smell the lawyers hovering like vultures waiting to pounce on their prey. The lawsuit that provided the impetus for this drop could be the Pandora's box that places energy-drink makers under increasing scrutiny, eventually leading to some form of FDA regulation and/or warning label on the product. This is a fear I've had for months now and is a primary reason I've avoided Monster Beverage. Until we get better clarity on the scope of the FDA's findings, I feel Monster is off-limits.
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