This Winner Keeps Winning CELH

March 6, 2024

In November we highlighted a rising star set for yet another surge: Celsius (CELH).

Turns out often times it pays to bet on a winning horse.

Not only were we right (CELH is trading +47% higher since this pre-earnings note went out and up +187% since our Bullish alert just over a year ago), but we think there’s more gas in the tank.

Here’s why:

On the LikeFolio front, CELH is gaining steam when it comes to brand buzz, with volume up +188% YoY, continuing to outpace stock gains.

In addition, Celsius leads other major brand names when it comes to web visits (predictive of future demand)…

And overall happiness levels – at 70% positive, several points ahead other beverage giants PEP and MNST.

It’s last quarter certainly impressed the market.

In 2023, Celsius saw a 102% increase in annual revenue, surpassing $1.3 billion, bolstered by a 95% growth in the fourth quarter alone, and achieved a record operating income of $266 million, translating to an impressive operating margin of 20%.

Much of this is driven by expanded availability thanks to its distribution partnership with PEP. Strong word-of-mouth recs and robust product placement also meant the company was able to achieve greater market share while spending less on marketing expenses (down -11% YoY in Q4).

Energy drinks at large are gaining steam among consumers (we talked about this in our January Trend Watch report).

The energy drink market is expected to continue growing robustly, with forecasts suggesting it could reach approximately $110 billion by 2024, growing at an 8-9% annual rate. Celsius is capturing a larger market share, even as it faces competition from established giants like Monster and Red Bull. Despite its rapid growth, Celsius still only represents a small fraction of the revenues of these market leaders, indicating substantial room for expansion, especially in international markets​.

We’re maintaining our Bullish outlook until we see reversions or slow-down in consumer sentiment.

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