Shares of Celsius Holdings (CELH +2.23%) were pulling back today as a downbeat consumer sentiment report weighed on the energy drink maker.
After plunging last year, Celsius has emerged as a battleground stock, with numerous bulls expecting a surge, but also a high short interest. Though there wasn't any company-specific news out on Celsius today, the stock has become volatile and sensitive to data points that could show consumer demand slowing.
As of 2:15 p.m. ET, the stock was down 12.9%.
Image source: Celsius.
Consumers are getting nervous
Stocks were down broadly today on worries about weakening consumer sentiment and tariffs, with growth stocks getting hit especially hard, as the Nasdaq Composite (^IXIC +1.59%) had fallen 1.4% at the same time.
Celsius isn't particularly sensitive to tariffs, though higher aluminum prices could make its cans more expensive, but it is sensitive to consumer spending. This morning, the Conference Board said its Consumer Confidence Index fell by seven points to 98.3. Expectations were down even more sharply, off 9.3 points to 72.9, showing consumers are feeling nervous about inflation and the potential impact of tariffs and other Trump policies, including government layoffs. It was the biggest monthly decline in the index since August 2021.
NASDAQ: CELH
Key Data Points
What it means for Celsius
Celsius finds itself at something of a crossroads. The company announced the $1.8 billion acquisition of Alani Nu, the nation's fourth-largest energy drink brand, last week, and investors cheered the move, sending the stock up 28% on Friday. However, the core business continues to struggle.
Celsius reported another decline in revenue and profit in its fourth-quarter earnings report, as challenges from PepsiCo's overstocked inventory continue to weigh on the stock. Additionally, the company said retail level sales in the U.S. grew just 2%, a far cry from the high-double-digit growth it was cranking out not long ago.
Celsius is struggling with new sugar-free competition from Red Bull and Monster Beverage, as well as the general maturing of the energy drink market. Weakening consumer spending could stymie its hopes for a comeback. After all, its drinks are expensive, and it relies on a customer base of Gen Z and millennials, who tend to have less discretionary income than older consumers. There are also plenty of cheaper alternatives to get a pick-me-up, like making your own coffee.
One consumer sentiment report isn't a red flag for the stock, but investors should keep their eye on the issue over the coming months. Either way, expect the volatility at Celsius to continue.
