$CELH · Brian Feroldi · 2026-11-01

Celsius stock has been steadily declining for the past few years and is currently down more than 70 percent from its peak price. However, if you only look at the revenue of this company, you will be confused because the company's revenue is growing at a very good pace.

So, is the falling share price and rising earnings a big opportunity, or is there something else behind it and is this stock actually a value trap? In this video, I will briefly explain what the company does, what went wrong, and give my opinion on whether it is an opportunity or a trap.

Let's first find out what the company actually does. Celsius Holdings manufactures energy drinks under three main brands.

The first is their flagship or main Celsius brand. This is the company's original and most important product. However, in 2025, the company added 'Adani Nu' as a second energy drink to their portfolio.

And later in 2025, they added 'Rockstar' to their portfolio as a third energy drink. Now, it is worth noting that the bulk of this company's production is actually handled through third-party co-packers, even though they have their own factory.

This company has deliberately decided to outsource both the production and distribution of their products to outside organizations.

In the United States and Canada, this task has been entrusted to their partner PepsiCo. And in the European and Pacific markets, this responsibility has been left to the Suntory Group.

Looking at the geographical breakdown, we see that approximately 97 percent of total sales come from North America. Europe's contribution is about 3 percent and the contribution of other regions is very small.

Although the company certainly has ambitions to grow their brand portfolio internationally.

From a business quality perspective, I always like to ask four questions. One, is this company's revenue predictable? Since people regularly use and repurchase the company's products, in my opinion the answer is yes.

Second, can the company increase the price of the product? In that case, I think the answer is no, because the company's gross margins are under pressure and the energy drink market is highly competitive.

Three, is this company recession-proof? In that case, I would give it a grade of A. I don't think sales will drop much during a recession, but I don't think the company's products are essential for people.

And finally, what is their competitive position? In that case, I would put this company in an average position. Its brand name is quite well-known, but there are plenty of alternative competing products in this sector.

The next question I always ask is, what stage of its business growth is the company at? And I think this company is very clearly at the operating leverage level. If you look at the company's revenue, revenue growth has been consistent and strong over the past few years.

If you look at profitability, the company is generating a positive operating profit of $160 million on sales of $3 billion. Now, from a capital return perspective, the company is actually buying back shares and has started to increase them more recently, but we haven't seen the share count decline in that way yet and the company doesn't pay a dividend yet.

So, when you think about where this company is in the business growth, I think it's a late-stage operating leverage business that's on the verge of becoming a capital return company.

If the company continues to invest money in buybacks or share purchases, it will definitely reach that point. The last thing I like to analyze in any business is the moat of the company, its current size, and most importantly, its trajectory.

Let's focus on the current size for a moment. I think this company's mode is very narrow and that's true for basically all beverage businesses.

The only thing that distinguishes these products from each other is basically the brand name. So, you are completely dependent on customers who will recognize, trust, and repeatedly purchase products from this brand.

And this market has become increasingly competitive in the last few years.

Another way to make a mod in this category is through a strong distribution system, which is definitely better than this company's competitors and startups, but there are companies like Monster, Pepsi, and Coca-Cola that have their own massive distribution systems.

So, that doesn't give this company much of an advantage over those types of competitors.

So all in all, I think it's a company with a relatively narrow focus. So, this is the business that has generated the company's strongest growth that we've seen historically. So, why is the market so bearish on this stock?

I think that's exactly what we saw happen with Celsius in 2025. That year, the company increased their distribution, resulting in a 20% increase in their distribution compared to the previous year.

However, if you look at the company's sales during that time, you will see that retail sales increased by only 6%. And what we can understand from this is that sales have decreased by an average of about 12% at each existing location.

So, if this were a restaurant, we would say that 'same-store sales' are actually declining, which is a big problem. And I think the market is seeing that and is definitely reacting to it.

Yes, the company is growing their revenue, but historically they have done so by increasing distribution, and this strategy only works as long as you have space. And unfortunately, I think we're at that point now in terms of Celsius.

The company is running out of space for new expansion in the United States. In their recent call, they basically said that they have 98% coverage in the United States, which means that if there is a store or convenience store that is likely to sell energy drinks, Celsius' products are already being supplied there.

So, they've run out of opportunities to expand their cable distribution system in the United States. It is true that they can expand their distribution by focusing on international markets, but there is no room left to expand distribution in the US, which is their most important market.

Management is certainly aware of this issue and in 2025 they embarked on a series of acquisitions to solve this problem. First, they bought Alani Nu for $1.8 billion in an effort to strengthen their portfolio.

And in August of that same year, they spent $585 million to buy Rockstar, diversifying their product portfolio.

So, in the space of just one year, the company spent $2.4 billion to add two more products to their portfolio. So, if you look at the growth rate of this company, you will see that the numbers you are currently seeing are quite good.

Thanks to those acquisitions, revenue growth accelerated in 2025 and that trend continues throughout 2026. But that growth came from the company's acquisitions, not from the core brand.

In fact, the core brand is getting smaller, so the company's flagship brand is constantly under great pressure.

And I think the market has realized that the company is achieving growth through acquisitions, and in response, they have lowered the share price. Which brings us to the valuation of the company.

There are several metrics we can look at to understand whether a company is cheap or expensive, but in my opinion, the simple 'price-to-sales' ratio is probably the best. This is a company with many accounting complexities that make their 'price-to-earnings' ratio unfit for valuation, but by looking at the 'price-to-sales' ratio alone we can get a general idea of how expensive or cheap the company is.

So, over the past five years, this company has traded at a price-to-sales ratio of almost five times, and by October 2026, this company is trading at just two times sales. So, this is a big discount compared to the last 5 years of trading and it indicates that the market is now questioning the company's growth strategy in the coming days.

So, is this company an opportunity for investors, or is it a value trap? Well, this stock is definitely an opportunity if you don't think this business is just a temporary trend, if you think the slowdown in core product revenue is just a temporary setback, and if you believe that this company's sales and profits will turn around again.

And to be fair, the beverage business can be a great business in the long run. Take Coca-Cola, which has remained the best-selling beverage for nearly 140 years. Or think of Monster Energy.

This company has proven to be a great investment for investors for over 30 years, and their Monster brand is still going strong.

However, there are many examples in recent history where many drinks came along that ultimately proved to be just temporary trends. In 2022, a company called Bang Energy, once the number three energy drink in America, was finally forced to file under Chapter 11 of the Bankruptcy Code.

So, this proved to be a temporary trend. Even successful companies like Boston Beer have fallen victim to temporary trends, where they were once at the forefront of the hard seltzer craze, but it proved short-lived.

Or take LaCroix, which is owned by National Beverage. The sales volume of this drink is constantly under pressure, which proves that this brand is somewhat of a temporary trend.

So, for this stock to be an opportunity today, you really have to believe that this is not a temporary trend and that selling will eventually stabilize and then start to rise again.

And importantly, it is worth noting that some of the company's directors and officers clearly believe that the brand is not temporary, as they are buying stock on the open market at prices ranging from $27 to $30 per share.

Five different directors have invested millions of dollars to buy the company's stock through 2026, which indicates to me that at least they don't think the product is a temporary fad.

However, this stock is a value trap if you think the product is a temporary trend, if you think its profits will remain under pressure, and if you think the company is simply making acquisitions to cover up weaknesses in its own internal business.

If you think these things are true, then this stock is truly a trap and you should stay away from it.

And when I think about these two outcomes, I am now firmly in favor of the trap. Everything I see tells me that Celsius is a temporary trend drink whose best days are past, and I'm not the kind of investor who would bet on a weak brand suddenly turning around or stabilizing.

However, if you disagree, there are a few things you should keep in mind before buying this stock. The first thing to keep in mind is organic growth. You would certainly want the sales of the Celsius brand to stabilize and eventually start growing again.

Secondly, you need to keep an eye on the company's gross margin. You need to ensure that the company is making consistent profits through sales and is not sacrificing part of the profits for product sales.

And the third thing to keep an eye on is acquisition. If this company keeps buying other brands in the hope of increasing revenue, it seems to me that management has no sense to grow their own brand.

However, I want to know what you think. Is this company an opportunity for today, or is it a failed stock? Let me know your thoughts in the comments section below.