Shares of the third-largest energy drink brand in the United States, Celsius (CELH 4.64%), were up 44% this week as of 11 a.m. ET Friday, according to data provided by S&P Global Market Intelligence.
While the company reported acceptable fourth-quarter results on Thursday, its announcement of a significant acquisition stole the show and led to a skyrocketing price.
Much ado about Alani Nu?
In an excellent move to divert attention from somewhat turbulent 2024 results, Celsius announced that it had acquired Alani Nu, the fourth-biggest energy drink brand in America, for $1.65 billion. Celsius paid less than 3 times sales and 12 times "fully synergized" earnings before interest, taxes, depreciation, and amortization (EBITDA) for Alani Nu.
The purchase price isn't outrageous, considering that Alani Nu's energy drink sales have grown by 50% annually over the last three years. Combined, the two brands now control a 16% share of a U.S. energy drink market projected to grow by 10% annually through 2029.
The growth of the two brands is eye-catching when paired together. In 2024 alone, they combined to increase retail sales by more than double that of Red Bull, the leader in the energy drink market.
As for Celsius' earnings, the company increased retail sales by 22% in 2024, but the stock's revenue only rose 3% during the year due to the timing of its sales to its primary distributor, PepsiCo. While this increase is far from the triple-digit growth rates it saw just a year ago, the fact that Celsius gained 160 basis points of market share in 2024 is an encouraging sign.
With Alani Nu expected to be cash-accretive in 2025 -- and poised for a potential sales bump from joining Pepsi's distribution network -- Celsius remains an intriguing growth stock. However, investors will need to be patient.
