Shares of the United States' No. 3 energy drink maker Celsius (CELH 3.01%) dropped 11% this week as of 2:30 p.m. ET Friday, according to data provided by S&P Global Market Intelligence.
While there wasn't one specific catalyst that sent the company's stock downward, a number of lingering worries continue to weigh on Celsius and its deflated share price.
NASDAQ: CELH
Key Data Points
Is Celsius down for good?
Just 18 months ago, Celsius was growing sales by triple digits, and its stock would go on to reach $90 per share. As of its latest quarter, sales had plummeted 31%, and the company's shares are now hovering around $22.
To oversimplify things, Celsius had a rough nine months. Battling a slowdown in the energy drink industry and inventory lumpiness with its distributor, PepsiCo, Celsius learned earlier this week that its sales data from Nielsen was disappointing as well.
Whereas peer Monster saw growth from both its namesake brand and Bang energy drinks, Celsius saw sales decline for the four weeks before Jan. 28. Making matters worse, Pepsi reported underwhelming earnings earlier this week that didn't mention its energy drink unit or its wunderkind partner.
Despite these challenges, Celsius investors should remain patient. First, most of these adverse events happened within the last year, and investors shouldn't gauge a stock's potential based on a few quarters' worth of data.
Second, it's critical to see how Celsius looks once the energy drink market grows again and the company's inventory with Pepsi normalizes.
Third, the company's expansion into foreign countries and the recent launch of a new, noncaffeinated drink could restart long-term sales growth.
Finally, at 24 times next year's earnings, Celsius doesn't have to clear a high bar to be a successful investment at today's prices if it can just turn things around.
