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Why Monster Beverage's Shares Went Up 16.3% in May

By Royston Yang – Jun 3, 2020 at 10:11PM

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The energy drink company is planning more new product launches for this quarter.

What happened

Shares of Monster Beverage (MNST -1.19%) went up 16.3% in May, according to data provided by S&P Global Market Intelligence.

The energy drink company saw continued demand for its portfolio of beverages during the first quarter, though growth may stumble temporarily due to weaker demand in April. Shares of the company are up 12.9% year to date and up a whopping 41% from the low of around $51 registered in March.

Man sitting at desk surrounded by books, chugging an energy drink.

Image source: Getty Images.

So what

Monster Beverage released a strong set of numbers in early May for its first-quarter 2020 earnings report. Net sales increased by 12.3% year over year to $1.06 billion, while net income increased by 6.6% year over year to $278.8 million. This continues the company's strong track record of growing both net sales and net income for the last five consecutive years. 

The company's share of the coffee plus energy category for the four weeks ended April 25 was 53.5%, according to CEO Rodney Sacks. Sales of Monster drinks in the energy category within the U.S., as compiled by Amazon.com, increased 137.5%, and its market share went up by 1.2 percentage points to 36.7%. There should be more good news flowing in as Monster reopens its office in China and begins distributing its new Monster Energy Dragon Tea there.

Now what

Monster has reiterated that the COVID-19 pandemic is not expected to impact the ability of the company to manufacture its beverages, and for bottlers and distributors to distribute its products. Also, with $701.8 million in cash, no debt, and $233.5 million in short-term investments as of March 31, 2020, the company is not expected to face any liquidity crisis.

Several new products were launched in the U.S. during the first quarter, including a new line of Reign Inferno Thermogenic Fuel. Internationally, the company added Monster Energy brand and Reign Total Body Fuel energy drinks to its portfolio in countries such as Brazil, Russia, Belgium, and Australia. Future launches are in the works in additional countries outside the U.S. These new product launches should continue to chalk up good sales figures for the company as it navigates the pandemic.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Royston Yang has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Monster Beverage and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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