What happened

Shares of energy drink-maker Celsius Holdings (CELH 2.59%), which has enjoyed a fantastic run over the past couple of years, surged even higher on Wednesday. As of 2:30 p.m. EST, Celsius stock is up 12.7% after the company announced a "multi-year deal" to sponsor events held by the Professional Fighters League (PFL), the world's second-biggest mixed martial arts (MML) sports organization.  

But is today's pop justified?

So what

On the surface, Celsius' news sounds pretty good. For several years at least, Celsius will be the Official Energy Drink Partner of the PFL, beginning with its sponsorship of the 2022 PFL World Championship that will take place on Nov. 25 at Madison Square Garden.

Celsius will also attach its name to the PFL "VIP Cageside Club" and provide free drinks to victorious PFL fighters after every event, beginning in 2023. PFL will also allow its fighters to serve as brand ambassadors for Celsius. And Celsius will win extra exposure as its brand is seen by millions of ESPN viewers, watching PFL broadcasts and pay-per-view fights.

Now what

One item of information that is notably missing from Celsius' press release on the PFL partnership, however, is...how much is all of this going to cost Celsius? While much ink was spilled describing the benefits of this deal to Celsius, no mention of the cost was made.

And that could be important, because while Celsius' sales have unarguably surged in recent years, growing 75% in 2020 and more than doubling in 2021 and in the first nine months of 2022, profits have been hard to come by for the stock. Indeed, Celsius' profits declined into the single digits in 2020, fell further in 2021 (to less than $4 million), and turned deeply negative in 2022 -- $166 million lost year to date.

Granted, analysts polled by S&P Global Market Intelligence forecast that Celsius will be back in the black by 2023, but precisely how profitable Celsius ends up being may depend on how much it shells out to PFL for this endorsement deal. With Celsius stock already valued in excess of 100 times projected 2023 earnings, investors probably shouldn't get too overworked about today's stock-price rise -- or about Celsius stock, period.