Celsius Holdings (CELH) took a big bet on women and so far it’s paying off for its shareholders.
When the energy drink company acquired Alani Nutrition for $1.8 billion last month, CELH stock soared as much as 35%.
The acquisition coincided with Celsius' strong Q4 earrings, with fourth-quarter revenue coming in at a record $332.2 million, beating the $326 million expected from analysts polled by LSEG.
Adjusted earnings of 14 cents per share also came in higher than analysts’ forecast for 11 cents per share.
Alani Nutrition is the maker of the female-focused Alani Nu energy drinks popular with social media influencers.
The deal gives Celsius access to “a growing community of Gen Z and millennial consumers” and “attractive female consumer demographics,” the company said in a post-acquisition statement.
Celsius expects that the combined brands will drive $2 billion sales.
“We believe investor confidence in [Celsius] as an attractive growth stock will be enhanced by these news items,” Roth Capital analyst Sean McGowan said in a research note after the deal was made.
It’s been a much-needed rally for Celsius, which has seen its stock plunge 66.1% over the past year.
The swift decline came after the company indicated in its Q1 earnings call last year that PepsiCo — its distribution partner — had ordered Celsius too aggressively, leading to stale inventory.
This inventory backlog led to its 2024 third-quarter revenue falling to $266 million in 2024 from $385 million in the previous year’s quarter, representing a 31% drop.
Push for greater share of growing yet competitive market
Wall Street has been bullish on Celsius’ acquisition of Alani Nu because it helps the company carve out a niche, rather than trying to compete in the broader market dominated by Monster and Red Bull.
Both Celsius and Alani Nu have built their brands on offering a healthier alternative for fitness-conscious consumers. Celsius drinks are sugar-free and low-calorie.
And, of course, Alani Nu gives the company a young, female market.
“Alani is especially popular among young women, a group with which the larger energy brands under-index, and it enjoys a reputation of being ‘even better for you,’” McGowan said in his research note.
Celsius currently claims about 11% of the energy drink market. The U.S. market was at $20.7 billion last year, and is expected to reach $41.4 billion by 2033, according to industry research.
Although the acquisition of Alani Nu could prove a long-term boon in grabbing increased share of the energy drink market, growth could come slow at first since both companies target similar consumers – young and fitness-focused.
“We believe the brands target the same audience so faster growth for Alani Nu could result in slower growth for CELH in the next few quarters,” Truist analyst Bill Chappell said in a note last month.
Your email address will not be published. Required fields are markedmarked