Celsius Holdings (CELH) Analysis:
Chart done on daily timeframe. Celsius Holdings investors kicked off the year celebrating the company’s accomplishments from 2023. The stock reached for new all time highs just a few months ago, but its valuation has been cut by more than 60% since then, leaving investors uncertain about their stock’s health. Trading at a new 52 week low, the company’s upside and downside swings already paints a picture of just how volatile this investment can be, but volatility can often bring opportunities, let’s dive into CELH’s numbers to see if its worth a buy.
The company’s revenue growth is a grew at a notable 94% in the first quarter of 2023, then another 111% in the second quarter; however revenue growth this year fell to 36% and 23% respectively in the first two quarters, substantially lower than last years. Celsius is in a very competitive space, and cautious consumers may be opting for other choices either because of rising economic costs, or because they prefer the competition, hence leading to slowing growth. With the company being fairly young, investors fear that they’re starting to hit a plateau, which would be far too early in their career.
With all that in mind, we also have to account for the fact that CELH was trading at a valuation that was too large for its own good earlier this year, which explains the sharp correction it has seen. The company was trading at about a 15B market cap, far too big in comparison to sales. Investors realized this shortly after the first two earnings this year, which reflects on the chart, where it created a double top pattern shortly after both those earnings.
So now that it come down to 8.92B valuation, is the company a buy?
It’s difficult to call this one a “safe” long term investment, largely because of the nature of their business. Their three financial statements are impressive, but their future heavily relies on how much they can keep their current customers and stay current enough for new customers to buy. We’ve said it before and we’ll see it again, CELH is a company that’s best to be acquired by a larger conglomerate. The company’s long term survival will be best if they were to be part of a company that has a large portfolio of beverage holdings, instead of on their own.