Geogira sent me this anecdote. While it’s only one observation I thought it might be of some interest.
Saul
“I thought maybe you may want to pass this on. I was in Walmart today and walking down the soft drink isle I noticed a man stocking Pepsi products. I started thinking about Celsius being distributed by Pepsi. I decided to ask if he stocked Celsius and he said yes. I then posed the question of how they are selling and he smiled and said Real Good. He repeated that a couple of times in our conversation. He said they were right there with Monster. He mentioned their biggest problem is they have a lot of flavors and people don’t know which one to buy. I then proceeded down where the energy drinks are and noticed almost all of the single cans of celsius were sold out. They have a pretty good size shelf space.”
Yeh when a bunch of us were skiing in Vail this year (Feb/March) and doing grocery runs for the ski lodge, despite Celsius having resort level advertising in the main base station gondolas in town, at the supermarket we found an ok shelving and ranging position but again practically sold out down to the odd can or so and facing a “stock out” situation. I expected more from Pepsi who pride themselves on channel push mastery as opposed to Coca Cola’s end market pull mastery.
Story vs experience wise, this also doesn’t sit well with the supposed channel stuffing Celsius has done and de-stocking Pepsi is doing in return. Getting stocked out just shouldn’t be happening when Celsius has supposedly stuffed the supply chain and Pepsi is attempting to de-stock.
Anecdote 2: I asked my 17-year-old daughter today if her friends were still talking about Celsius and going out specifically to buy it and she said yes. When I first asked her 6 months ago, she hadn’t even heard of it, now it’s the energy drink of choice among her crowd.
But the 35% dive since the Nielsen report is starting to be really painful… I get the correction exaggeration, but at some point, I might have to cut my losses.
On the bright side, I finally saw Celsius available on Kroger. Hitting a major chain is definitely relevant. And I agree, reduce the flavors by half. It’s confusing for the consumers.
Options are OT for this board, that being said, I’ve sold covered calls on my Celsius positions. If they are exercised, I’ll still lose money, just not quite as much. Please don’t reply to this post.
They finally did the Celsius shelf reset at my Appleton, Wisconsin Walmart. You cannot get more prime real estate than this. Adjacent to the self checkout machines.
I know the stock is beaten up. However, as John Finley pointed out during his conference call, they are staying the course and they do expect good things from the shelf reset.
I do too. I added to my holdings yesterday (sigh), but I think better days are ahead.
Costco is always fully stocked with case Celsius. I am hooked and now days buy a case every week to reduce my Coke Zero addiction. Even my Asian wife drinks it.
CELH stock is in a slump right now and this will likely continue until the market feels they have visibility in demand, given the Pepsi up/down game and the uncertainty of the international volume. If CELH falls below $50, then we have a new buying opportunity, especially for those who missed this bus the first time.
Iamnzane,
Thanks for the response. I don’t want to sound harsh, but I think it’s a good idea to add a little more color to your $50 price target. Is the price to sales more within a historical range? Is there another valuation metric that you feel is important? I’d really like to understand more of your thinking.
Different experience at the Costco I shop at. Recently I looked for Celsius and there was none. I didn’t inquire about it because I didn’t intend to buy it. However, on my most recent visit, Celsius was back in stock.
Actually, I’ve decided that there are better places for my money (NU, TMDX, APP) so I’m planning to exit CELH, but not at the current price. I sold covered calls which will expire worthless on Friday.
Scratching my head about what to do next, sell another round of calls, sell the stock or wait and watch. I think the stock has been unfairly beaten down. I am quite confident that it will recover at least back to somewhere in the $60s. How long to wait is the question? Fall below $50? I really doubt it, but it’s the market. Thinking that rational pricing will prevail is an irrational expectation.
I was not trying to do a valuation on PS, PE, or whatever. I just observe that if we get back at $50, the price has reverted exactly to where it was 1 year ago. There is a lot of speculation around CELH. In the last year we have had enormous revenue gains over 100% and the company and the product has proven itself. Also, low $50s is the entry point for most of my purchases. So yeh, I’ll buy more below $50. Sorry if this is not very analytical.
Zane,
Your explanation is fine with me. Seeing a business grow by over a 100% with an entry point the same price as a year ago, and, if I may add, nice growth prospects going forward. Sounds good if it drops to that point.
