Celsius Holdings (CELH -1.13%) has had a rough year. The energy drink brand has plunged by almost 40% this year, but key insiders have been buying the dip. Celsius' CEO and two of its directors have poured almost $2 million into the stock this month.
When insiders buy the stock, it's often a good sign. The people with the most knowledge about the company are building their positions, but that hasn't always worked out for investors. Here's what you should know before joining Celsius' executives with their recent buys.
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Executives buying shares does not guarantee the price will go up
Although it's good to see executives put their skin in the game, it doesn't always translate into a higher stock price. For instance, Nike CEO Elliott Hill bought more than $2 million worth of Nike shares on April 13. Former Apple CEO Tim Cook made a similar investment in the beleaguered athletic apparel brand at the same time.
Nike shares have dropped by more than 15% since Hill invested more money. The athletic brand pitches itself as a "growth company" on its investor relations site, even though sales dropped 1% year over year in the fourth quarter of fiscal 2026.
That doesn't guarantee Celsius Holdings will meet the same fate, but it shows that investors shouldn't blindly invest in a growth stock just because executives are putting their own money into the company.
NASDAQ: CELH
Key Data Points
Growth has been fizzling, but remains decent
The days of Celsius' hyper-growth appear to be over. The company only reported 11% year-over-year revenue growth in the second quarter.
Net income dropped due to a one-time distributor termination fee related to the future logistics of the recently acquired Alani Nu brand. On paper, a 45% year-over-year dip in net income looks bad. However, if you exclude the one-time fee, profits actually increased by 35.5% year over year. Operating income would have been up by 8.6% year over year.
Acquisitions and the company's flagship Celsius brand have given it almost 20% market share in the energy drink market, according to CEO John Fieldly. He also touted the brand's diversified portfolio and that it can return the company to "durable, long-term growth."
The stock only trades at a 16 forward P/E ratio, which is much lower than the 70 forward P/E ratio it commanded less than one year ago. While it made sense for investors to sit out the period when executives bought Nike shares, Celsius has stronger fundamentals, and executive buying serves as a nice bonus.
