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Why Celsius Holdings Stock Fell 19% in March

By Jon Quast - Apr 7, 2021 at 10:29AM

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After rising around 1,000% in 2020, investors sold in March due to concerns over slowing growth.

What happened

Shares of beverage company Celsius Holdings (CELH -2.07%) fell 19.3% in March, according to data provided by S&P Global Market Intelligence. The fall came after the company reported financial results that showed a sequential decline in revenue and an annual decline in profits. But there may be more to the story than meets the eye.

So what

On March 11, Celsius reported financial results for 2020. Full-year revenue was up a whopping 74% from 2019. However, investors seemed concerned. To be fair, fourth-quarter revenue showed a sequential decline -- third-quarter revenue was $36.8 million, whereas Q4 revenue was $35.7 million. Additionally, the company's full-year net profit fell from $9.9 million in 2019 to $8.5 million in 2020. With growth stocks like Celsius, investors don't like to see declining top and bottom lines.

A rising red arrow breaks near the top resulting in the tip of the arrow pointing down.

Image source: Getty Images.

However, it's important to have a little perspective when it comes to Celsius. It grew revenue in 2020 primarily by growing its distribution network -- in the U.S., it went from just 18,000 locations in 2018 to over 82,000 now. But also consider that the company's products had a strong presence in gyms prior to the COVID-19 pandemic. Customers have proved loyal to the brand, seeking it out online with brick-and-mortar gyms closed. Because of this, Celsius gained e-commerce market share from titans in the space including Red Bull and Monster. To me, 2020 was an impressive year for the company.

Additionally, let's not forget, even after pulling back in March, Celsius Holdings stock is still up close to 1,000% since the start of 2020. It's been an incredible 15-month run, and it's not surprising for the stock to cool off a little, at least for a time.

CELH Chart

CELH data by YCharts

Now what

Celsius management didn't give formal guidance for 2021 in its Q4 conference call but did say sales were tracking well so far in the first quarter. Investors should keep an eye on expanded distribution in coming quarters -- this will be a great driver of sales growth for now. But it will also be interesting to see what happens with Celsius' sales as gyms continue reopening as the coronavirus vaccine is distributed.

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Stocks Mentioned

Celsius Holdings, Inc. Stock Quote
Celsius Holdings, Inc.
$58.77 (-2.07%) $-1.24
Monster Beverage Corporation Stock Quote
Monster Beverage Corporation
$87.63 (1.00%) $0.87

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