After Celsius Holdings (NASDAQ: CELH) reported better-than-expected earnings last night, the stock rose today. The stock recorded a 9.9% gain on Wednesday. During the quarter, revenue increased 137% to $154 million, surpassing analyst consensus at $148.7 million.
It was influential in North America, where sales grew 171% to $145.4 million. The company reported a 208% increase in direct store distribution, driven by rapid growth in brick-and-mortar stores after rapid growth in online channels.
Inflationary headwinds contributed to the company’s decreased gross margin in the quarter. The company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) have increased from $8 million to $17.1 million.
See also Celsius Holdings (NASDAQ: CELH) live Prices.
A jump from $0.01 to $0.12 in GAAP earnings per share beat estimates of $0.08 by $0.02. A few more details were also revealed about Celsius’ new partnership with PepsiCo. PepsiCo announced on Aug. 1 that it had made a $550 million investment in Celsius in convertible preferred stock.
The company now has distribution rights for Celsius in the U.S., with the chance to expand further. Its preferred global distributor will also be Pepsi.
Reason to avoid
A lot of risks are associated with this company. In a business like this, where a consumer product is experiencing rapid growth, one risk that comes to mind is that it might be a fad.
There are many examples of products that soared in popularity for a time, only to crash and burn – does Celsius have the potential to fall into this category? That’s for sure. The company is riding a lot of tailwinds that are not going anywhere, primarily from health-conscious consumers who will appreciate Celsius’ products’ benefits.
A company with triple-digit, accelerating growth rates may be at a greater risk of slowing down.
Technical analysis
A consensus rating of Buy has been granted to Celsius. Six buy ratings, one hold rating, and no sell ratings are reflected in the company’s average rating score of 2.86. Celsius Holdings rose 17.7% during the holiday trading week that ended on July 17.
Having had a horrible June, it was nice to start July on a good note. Since the beginning of 2022, Celsius Holdings has returned 5%, well above the S&P 500’s negative 18% return.
