CELH stock analysis: is Celsius a buy after the $17 billion wipeout?

Celsius Holdings stock price has collapsed, turning a company that was highly popular among investors into a toxic one. It has collapsed from near $100 in 2024 to the current $22. It has had a $17 billion wipeout as its market cap has crashed from $22 billion to $5 billion. So, is the CELH stock a good buy ahead of earnings?

Celsius Holdings growth has faded

Celsius, a manufacturer of energy drinks, has had a rollercoaster in the past few years. It took off in 2020 when it was trading at less than $2 and then surged to near $100 last year as demand for its drinks rose in the US.

The CELH stock surge also happened as the company inked a distribution deal with PepsiCo, the biggest competitor to Coca-Cola. That partnership mirrored that of Monster Beverages and Coca-Cola.

The idea is that Pepsi would distribute Celsius products and earn a commission doing so. It is a mutually beneficial deal since Celsius would not need to invest in logistics. 

These actions helped Celsius Holdings to become the fastest-growing company in the energy drinks industry. Its annual revenue jumped from $75.1 million in 2019 to over $1.38 billion in 2023.

Recently, however, there are signs that the growth momentum has faded even as the company focuses on international expansion. The most recent results showed that its third-quarter revenue crashed by 31% to $265 million. 

Its gross margin also dropped by 440 basis points to 46%, while its net income crashed by 92% to $6.4 million. These numbers were much weaker than what analysts were expecting. The data confirmed multiple Nielsen data that showed that its shipments to retailers continued falling. 

CELH earnings ahead

The next important catalyst for the CELH stock price will be its earnings, which are scheduled on Thursday. These numbers will provide more color about its performance and whether its business improved. In a note, a WedBush analyst told Invezz:

“A look at the recent Nielsen data shows that Celsius Holdings business is not doing all that well. My base case is for its fourth-quarter revenue to come in at $305 million, a big drop from the $347 million it made a year earlier. I also expect that its international business to account for a small share of its business.”

His estimate is lower than the average forecast among 15 Wall Street analysts. These analysts anticipate that the total revenue will come in at $330 million, down by 4.78% from a year earlier. That will bring its annual revenue to $1.36 billion. 

Analysts also anticipate that Celsius earnings per share will drop to $0.1 from $0.15 a year earlier. Signs that the business is stabilizing will likely lead to a higher Celsius stock price.

Read more: CELH stock price forms a bullish divergence: is Celsius a buy?

Celsius Holdings stock price forecast

The daily chart shows that the CELH share price has collapsed in the past few months. This crash happened after it formed a double-top pattern at $100. A double-top is a popular bearish reversal pattern that leads to more downside over time.

CELH stock has remained in a tight range this year as investors wait for the next eanings. The accumulation and distribution indicator has continued falling. It has formed a small falling wedge pattern, a popular bullish reversal sign.

Therefore, the stock may stage a strong comeback if its earnings are better than estimates. If that happens, the next point to watch will be at $32.6, the highest swing in December last year. A crash below $20 is also possible if the numbers are worse than expected.

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