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HARRISON MILLER

Celsius Spikes On Earnings; Is It Getting A Wall Street Bets Boost?

Energy drink makers Celsius and Monster Beverage bolted higher Thursday after reporting record sales for their respective Q4 results. CELH stock spiked in what appears to be a short squeeze. MNST shares surged.

Celsius Earnings

Celsius Holdings reported earnings of 17 cents per share, improved from a loss of 12 cents per share the year prior. Fourth-quarter revenue spiked 95% to a Q4 record of $347.4 million, slowing slightly for the second quarter in a row after its torrid pace of triple-digit increases.

FactSet analysts expected earnings of 15 cents per share on $329 million in revenue. Although Celsius topped FactSet estimates, it missed the consensus earnings forecast of 18 cents per share.

Full-year earnings rose to 77 cents per share from a loss of 88 cents per share for the prior year. Fiscal 2023 revenue leapt 102% to a record $1.318 billion.

Celsius touted it was the top dollar and unit growth brand across U.S. multi-outlet with convenience store (MULOC) locations in 2023. For the last four weeks of 2023, Celsius ended as the No. 3 energy drink at MULOC locations in the U.S. with a 10.5% market share, compared to a 4.9% share for the same period last year. On Amazon.com, Celsius was the highest-selling energy drink for the 14-week period ending Dec. 30 with a 19.7% share of the category. It came in just ahead of larger rival Monster's 19.6% share while RedBull had a 12.3% share.

North America sales increased 97% for the quarter to $332.8 million while international revenue jumped 68% to $14.6 million.

Celsius reported that promotional activity reduced revenue by $315.2 million for the year, an increase from the $158.5 million reduction in 2022. Promotional allowances increased to $99.8 million from $36 million.

CELH stock dropped in opening trade, then rallied more than 20% Thursday. That scored a breakout above a 68.95 buy point for a consolidation stretching back to September. Shares fell 5% premarket.

A reported 34.8% of Celsius shares were sold short before the start of the session. Website ApeWisdom showed the stock trending on the subReddit r/WallStreetBets site, leading to some speculation that the group might be intentionally forcing a short squeeze on the stock. Short squeezes occur when the price of a heavily-shorted stock rapidly moves higher, which forces investors that bet against it to buy shares to cover their positions.

Monster Beverage

Monster Beverage late Wednesday reported earnings growth slowed for the second quarter in a row, increasing 22% on a year-over-year basis, to 35 cents per share. Fourth-quarter sales increased 14.4% to a record $1.73 billion. Adjusted earnings, including the step-up for its Bang Energy inventory and alcohol impairment charges, were 38 cents per share for the quarter.

FactSet analysts expected earnings of 38 cents per share on $1.755 billion in revenue.

Sales to customers outside the U.S. increased 17.4% to $637 million. "We continue to see sound growth in the energy drink market globally," co-CEO Hilton Schlosberg said in the release.

Full-year earnings increased 38% to $1.54 per share on 13.1% revenue growth to a record $7.14 billion.

Morgan Stanley raised its price target on MNST stock to 68 from 63 after the results and maintained an overweight rating on the shares. Monster's Q4 results and January sales should be viewed positively while top line growth remains "solid" with strong international share gains, the firm wrote in a Thursday research note.

MNST stock leapt 5.8% Thursday. Shares are tinkering with an early entry at 59.40. Monster's long-term consolidation has a buy point at 60.47, according to MarketSmith pattern recognition.

Monster stock rose 2.6% so far this year through Thursday.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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