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What: Shares of Monster Beverage (NASDAQ:MNST) were reviving today, climbing as much as 14% on news that the Food and Drug Administration's response to safety concerns surrounding the energy drink may be less severe than some had feared.
So what: The stock had fallen nearly 50% over the past six months largely on concerns of increased regulation after the drink had been implicated in a handful of deaths. Those worries seem to have been mitigated today after the FDA sent a letter to Sens. Dick Durbin (D-Ill.) and Richard Blumenthal (D-Conn.), who had called for an investigation. The letter said the agency is looking into the matter but also suggested that immediate action is unlikely, adding that there is no evidence that two of the major ingredients in Monster's energy drinks, taurine and guarana, are dangerous. Monster has stood by the safety of its drinks.
Now what: Any indication that regulation will be lighter than expected should naturally boost the stock, but the jury's still out on the public reaction to all this negative publicity. Monster's sales growth slowed considerably in its last quarter, and the stock still trades for a premium. Today's word from the FDA certainly bodes well for Monster, but I wouldn't say it's out of the woods yet.
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Jeremy Bowman and The Motley Fool have no positions in the stocks mentioned above. Motley Fool newsletter services recommend Monster Beverage. 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.