Despite the stock market’s impressive performance in September, not all top performers have shared in the success. In fact, many stocks, excluding those related to artificial intelligence, have struggled this year. One such company is Celsius, a popular energy drink brand, which has seen its stock plummet over 67% from its all-time high in May. The main reasons behind this decline are short-term headwinds affecting revenue growth. However, this downturn may present a buying opportunity for investors with a long-term perspective.
The energy drink category as a whole has experienced a slowdown in the US this summer, with convenience store traffic declining last quarter. This has impacted Celsius’ sales, as convenience stores are a key distribution channel for the brand. Furthermore, a deal with PepsiCo two years ago has led to a normalization of inventory levels, resulting in a decrease in revenue growth.
Despite these challenges, Celsius continues to gain market share from competitors like Monster Beverage. The company’s market share has increased from 7% at the beginning of 2023 to around 12% last quarter. Additionally, Celsius is expanding its international presence, having entered markets in Australia, New Zealand, the UK, and France.
With its price-to-earnings ratio now at 31, Celsius appears more attractive than it did at the start of the year when its P/E was close to 100. As the company’s revenue growth resumes and profit margins expand, its P/E ratio is likely to decrease. With opportunities for further market share gains in the US and international expansion, Celsius presents a compelling buying opportunity for investors with a long-term view.
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