Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of energy-drink maker Monster Beverage (NASDAQ:MNST) continued their slide for the second straight day, down as much as 12%, following negative news from the FDA and Goldman Sachs.
So what: One factor driving the maker of Monster Energy lower is the fact that Goldman Sachs removed Monster Beverage from its "conviction buy" list. That was perpetuated by confirmation today that the Food and Drug Administration is investigating reports of deaths associated with consumers who drank Monster Energy. The scope of the FDA's investigation dates back to 2004 and will focus on the safety of the highly caffeinated energy drink. Monster Beverage denies all allegations that its energy drink is responsible for consumers' deaths.
Now what: It's almost like you can smell the lawyers hovering like vultures waiting to pounce on their prey. The lawsuit that provided the impetus for this drop could be the Pandora's box that places energy-drink makers under increasing scrutiny, eventually leading to some form of FDA regulation and/or warning label on the product. This is a fear I've had for months now and is a primary reason I've avoided Monster Beverage. Until we get better clarity on the scope of the FDA's findings, I feel Monster is off-limits.
Craving more input? Start by adding Monster Beverage to your free and personalized Watchlist so you can keep up on the latest news with the company.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
Motley Fool newsletter services have recommended buying shares of Monster Beverage and Goldman Sachs. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
Why Monster Beverage Corp. Stock Rose 43% in 2017
The energy drink titan is exploring some highly caffeinated growth opportunities overseas.
Investors Think Monster Beverage Still Needs an Energy Boost
Find out why investors were disappointed with solid growth in revenue.
Monster Beverage Falls Flat Despite Record Sales
Growth rates continue to decelerate, raising concerns about the future.