How to Invest in Liquid Death

Liquid Death's founder, Mike Cessario, wanted to make drinking water cool. He and his partners had an idea to create an edgy water brand that would get more people to drink healthier beverages more often. They also wanted to help curb plastic pollution by putting water in cans instead of plastic bottles.

What they thought would be a niche concept has become a global brand. The company has grown its sales to more than $100 million annually in a few short years. It expects that number to continue growing briskly as more people learn about its growing product line, which includes more than canned water.

Liquid Death's growing popularity has many people eagerly anticipating its initial public offering (IPO). Here's a look at what you need to know about Liquid Death and how to potentially buy its stock ahead of its IPO.

Is it publicly traded?

Is Liquid Death publicly traded?

Liquid Death wasn't a publicly traded company as of late 2023. The privately held company's investors include several venture capital funds, Live Nation Entertainment (LYV 1.51%), and its founder and CEO Mike Cessario (who reportedly owns a 10% stake). In addition, Liquid Death has celebrity investors, including Swedish House Mafia, Machine Gun Kelly, Tony Hawk, and Whitney Cummings.

IPO

When will Liquid Death IPO?

As of late 2023, Liquid Death was reportedly working towards getting on the IPO calendar. It hired renowned Wall Street investment bank Goldman Sachs (GS 1.79%) to handle its IPO. The company was reportedly looking to go public in 2024, possibly by the spring.

How to invest

How to buy Liquid Death stock

Liquid Death isn't a publicly traded company yet, so investors can't buy shares of the water company in their brokerage account.

However, accredited investors (i.e., high-net-worth individuals or those with high incomes) can sometimes buy pre-IPO shares of companies like Liquid Death on secondary platforms such as EquityZen or Forge Global (FRGE 0.52%). Accredited investors who really want to get in ahead of its upcoming IPO should check out those platforms to see if they have shares of Liquid Death available to buy.

Non-accredited investors will have to be patient and wait until the company launches its IPO, which could come in early 2024. In the meantime, those interested in the water company could consider investing in a publicly traded company focused on capitalizing on the same growth trend as Liquid Death. Here are three options to consider:

The Coca-Cola Company

The Coca-Cola Company (KO 0.0%) is a global beverage company. It has a portfolio of brands in the sparkling drink, water, sports, coffee, tea, juice, value-added dairy, and plant-based beverage categories. Its water brands include Dasani, Smartwater, Smartwater sparkling, Topo Chico, and AHA. Dasani is the No. 1 national water brand in the U.S., while Smartwater is the top premium water brand.

PepsiCo

PepsiCo (NYSE:PEP) is a global beverage and convenience foods company. It owns several beloved brands, including Pepsi-Cola, Lay's, Doritos, Gatorade, Quaker, and Cheetos. The company's portfolio also features waters and enhanced waters, including Bubly, LIFEWTR, Aquafina, and Propel.

Nestle

Nestle (NSRGY -0.09%) is a food and beverage company based in Switzerland. It owns over 2,000 brands across several categories, including chocolate, cereals, coffee, drinks, ice cream, and pet care. Nestle also owns several water brands, including Perrier, S. Pellegrino, Acqua Panna, and Nestle Pure Life.

People who want to invest in one of these Liquid Death alternatives can purchase shares in any brokerage account.

Here's a step-by-step guide on how to invest in stocks like Liquid Death:

1. Open a brokerage account

You'll have to open and fund a brokerage account before buying shares of any company. If you still need to open one, here are some of the best-rated brokers and trading platforms. Take your time researching brokers to find the best one for you.

2. Figure out your budget

Before making your first trade, you'll need to determine a budget for how much money you want to invest. You'll then want to decide how to allocate that money. The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years. You don't have to get there on the first day. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.

3. Do your research

It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to make sure you have a solid grasp on whether the company can grow value for its shareholders over the long term.

4. Place an order

Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:

• The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
• The stock ticker (KO for Coca-Cola, PEP for PepsiCo, and NSRGY for Nestle).
• Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.

Once you complete the order page, click to submit your trade and become a shareholder in a publicly traded company benefitting from the same growth trends as Liquid Death.

Investors would follow a similar process to buy an IPO stock like Liquid Death when it goes public. Once shares become available, select Liquid Death's chosen stock ticker to buy shares through your brokerage account.

Profitability

Is Liquid Death profitable?

As a private company, Liquid Death doesn't need to publicly disclose its financial results, so there wasn't a lot of publicly available information about its profitability as of late 2023.

However, according to a Forbes article in early 2023, the company wasn't yet profitable. While it was generating more than $100 million in annual revenue, it was dealing with skyrocketing costs. The company was working on a plan to reduce costs, notably ocean freight, which amounted to 47% of its expenses in 2022. Curbing those costs could put it on the path to becoming profitable by 2024.

Becoming profitable and growing its earnings will be important to the company's future. It will enable Liquid Death to retain earnings to fund its growth instead of relying on outside investors. Investing those retained earnings to expand should help increase the company's value for shareholders.

Should you invest?

Should I invest in Liquid Death?

Because Liquid Death isn't yet public, most people can't invest in the company. However, it could complete an IPO as early as 2024. That gives interested investors some time to do their research.

You shouldn't skip the research step. It will hopefully make you even more excited to buy shares. However, you might find something that changes your opinion about the company or its future prospects.

To help get your research started, here are some reasons why you might want to invest in Liquid Death's IPO:

• You're a big fan of Liquid Death's products.
• You like the company's mission of getting more people to drink healthier beverages and eliminate plastic pollution.
• You believe it can continue growing sales rapidly.
• You think it will become a very profitable company in the future.
• You're comfortable with the company's valuation, which was seven times sales based on its pre-IPO value of $700 million.
• You like to invest in founder-led companies.
• You want to add a water stock to your portfolio.

On the other hand, here are some reasons why you might choose not to invest in Liquid Death's IPO:

• You're not a fan of Liquid Death's products or haven't tried them.
• You're concerned the company might be a fad and not deliver sustainable growth.
• You're not sure the company will be able to grow into its lofty pre-IPO valuation.
• You think that it could struggle as it gets bigger and faces more competition from the larger players in the water space.

ETFs

ETFs with exposure to Liquid Death

Because Liquid Death is still a private company, you can't passively invest in its stock through an exchange-traded fund (ETF) yet.

However, people interested in investing in the food and beverage sector have a couple of food ETF options to consider, including:

• First Trust Nasdaq Food & Beverage ETF (FTXG -0.47%): The ETF gives investors exposure to companies in the food and beverage industry. It aims to hold 30 to 50 stocks. The Kraft Heinz Company (KHC -0.55%), Mondelez International (MDLZ -0.27%), and The Coca-Cola Company were its top three holdings in late 2023. The fund has a 0.6% ETF expense ratio.
• Invesco Food & Beverage ETF (PBJ 0.22%): The ETF invests in companies that manufacture, sell, and distribute food and beverage products, agricultural products, and products related to developing new food technologies. The fund holds 30 stocks, led by Chipotle Mexican Grill (CMG 2.41%), Kraft Heinz, and Mondelez International in late 2023. The ETF has a 0.57% total expense ratio.
• VanEck Future of Food (NYSEMKT:YUMY): The fund focuses on companies that, among other things, seek to disrupt the food industry. The ETF held more than 40 stocks in late 2023, led by Ingredion (INGR -1.04%), Deere (DE -0.18%), and Bunge (BG -1.28%). The ETF had a 0.69% expense ratio.

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The bottom line on Liquid Death

Liquid Death is quickly becoming one of the most popular water brands. Its sales are growing briskly, and it's working towards becoming profitable. This combination has investors thirsting for its IPO. If it can deliver on its promise of profitability, its stock could be a winning IPO.