Is Celsius Holdings (CELH) Mirroring Wall Street Downturn?

As the broader market grapples with volatility and uncertainty, investors are left wondering if Celsius Holdings, Inc. (CELH) is merely a casualty of the downturn or if its stock price dynamics are indicative of a more profound issue. This article explores the correlation between CELH's stock performance and the broader market indices, as well as the factors driving the company's stock price.



CELH's stock price has been on a rollercoaster ride over the past 18 years, with a maximum drawdown of -99.79% and an annualized return of 3.95%. During the 2008 financial crisis, CELH's stock price dropped by approximately 75% from its peak, while the S&P 500 index experienced a maximum drawdown of around 57% during the same period. This indicates that CELH's stock performance was more volatile than the broader market during this downturn. Similarly, during the 2020 COVID-19 pandemic, CELH's stock price dropped by approximately 51.69% from its peak, while the S&P 500 index experienced a maximum drawdown of around 34% during the same period. This suggests that CELH's stock performance was more volatile than the broader market during this recent downturn as well.



The primary factors driving CELH's stock price can be attributed to the company's strategic initiatives, financial performance, and market dynamics within the beverage industry. Here are some key factors and their impact on CELH's stock price:

1. Strategic Initiatives and Partnerships:
- Celsius Holdings' strategic partnership with PepsiCo has significantly enhanced the company's distribution capabilities, particularly in the U.S. and Canadian markets. This partnership, announced on August 1, 2022, has contributed to CELH's stock price growth by expanding its market reach and increasing shelf presence.
- The company's expansion into international markets, such as Europe and Asia-Pacific, has also driven stock price appreciation. As of September 30, 2024, Celsius reported revenues of $47.1 million in Europe and $2.1 million in Asia-Pacific, reflecting a 49% and 48% increase, respectively, compared to the same period in 2023.

2. Financial Performance:
- Celsius Holdings' revenue growth has been a significant driver of its stock price. For the nine months ended September 30, 2024, the company reported revenues of approximately $1.023 billion, a 5% increase from the same period in 2023. This growth, coupled with a gross profit margin improvement to 50% from 48% in the same period, has positively impacted CELH's stock price.
- The company's net income for the nine months ended September 30, 2024, was $163.9 million, compared to a net loss of $0.6 million for the same period in 2023. This turnaround in profitability has contributed to the stock's price appreciation.

3. Market Dynamics and Competitive Landscape:
- The functional beverage market, in which CELH operates, has been growing due to increasing consumer demand for healthier and more innovative beverage options. This market growth has positively impacted CELH's stock price.
- The company's strong brand recognition and diverse product range, including energy drinks and on-the-go powders, have enabled it to capture a significant market share. As of Q3 2024, CELH's market share within the Nonalcoholic Beverages Industry was 0.82%, and within the Consumer Non-Cyclical Sector, it was 0.89%. These market shares, although relatively small compared to larger competitors, reflect the company's ability to compete effectively in the beverage market.

In conclusion, CELH's stock price performance has been more volatile than the broader market during recent downturns, suggesting that the company's stock price is influenced by factors beyond the broader market dynamics. While strategic initiatives, financial performance, and market dynamics within the beverage industry have contributed to CELH's stock price growth, the company's reliance on key distributors and supply chain vulnerabilities pose potential risks to its operational stability. As investors continue to monitor the broader market's volatility, they should also consider the unique factors driving CELH's stock price to make informed investment decisions.