Shares of an energy drink company Celsius (NASDAQ: CELH) This week fell as much as 16.8% as industry data pointed to slowing energy drink growth, according to data from S&P Global Market Intelligence. Shares are down 16.7% this week as of 2:30 PM ET.
The energy drink delay
To be clear, no earnings reports are available yet, but investors are looking at market data from third-party analysts that points to slowing growth for energy drinks. At an industry conference this week, CEO John Fieldly said he thinks the entire energy market would be in decline without Celsius.
What investors are struggling with is the right price to pay for Celsius shares. After this week’s decline, shares are still trading at more than 10 times sales and 67 times earnings. That’s an incredibly high price for a consumer stock, but Celsius has also been a growth engine that has earned a hefty multiple.
what to do now
As a Celsius shareholder who thinks long term, I view this pullback as more of a buying opportunity. Stocks are still up over the past year and this spring’s pop wasn’t driven by great results, it was just a trading phenomenon.
What I see in the industry is still a growth story, although there will be volatility depending on distributor inventory, the speed at which stores reset shelves and when international expansion occurs. What I’m more concerned about are the long-term trends and a company still growing over 30% annually is a good bet even at a high valuation.
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Travis Hoium has positions in Celsius. The Motley Fool holds positions in and recommends Celsius. The Motley Fool has a disclosure policy.
Celsius Shares Plummet 16.8% in Terrible Week was originally published by The Motley Fool
