What happened

Shares of Monster Beverage (NASDAQ:MNST) are falling today, down 7% as of 10:55 a.m. EDT, after the energy-drink specialist reported a weaker-than-expected first quarter.

So what

Sales increased 15% year over year to $850.9 million, which was just slightly ahead of analysts' estimates. The company's bottom line checked in a little short at $216 million, or $0.38 per share, compared to analysts' estimates calling for $0.39 per share.

In the press release, Chairman and CEO Rodney Sacks said:

In the first quarter of 2018, we successfully launched our Monster Energy brand with the Coca-Cola bottlers in Argentina. Subsequent to the 2018 first quarter, we relaunched Monster Energy with a Coca-Cola bottler in a lead market in India. In the ensuing quarters, we are also planning a transition in Ecuador, as well as launches of Monster Energy in Uruguay and in a number of other countries in the Middle East and Africa with Coca-Cola bottlers.

Two energy drinks sitting on ice.

Image source: Getty Images.

Now what

It really wasn't a horrible quarter from Monster Beverage, and while expanding internationally is great for its top line, it's hurting margins in the near term. Gross profit as a percentage of net sales during the first quarter was 60.6%, down 420 basis points year over year. This should be a short-term problem, as eventually Monster Beverage will benefit from growing economies of scale worldwide, which should push gross margin higher.

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Monster Beverage. The Motley Fool has a disclosure policy.