Celsius Holdings (NASDAQ: CELH) stock price has suffered a harsh reversal this week as investors remained concerned about its growth trajectory. The stock has plunged for three straight days and moved into a bear market.
Why Celsius Holdings slumpedI covered Celsius Holdings a few weeks ago and recommended it as a good buy ahead of earnings. This prediction worked out smoothly as the stock surged to my target level of $99.90.
Celsius’s published strong financial results earlier this month. Revenue jumped by 37% in Q1 to over $355.7 million while its gross profit surged by over 60% to $182.2 million.
Most importantly, its net profit jumped by almost 90% to over $77.8 million. Most of its revenue is still coming from its core North America business while its international segment grew by 43% to over $11.3 million.
Like we have seen with Monster Beverage, international market is core for energy drinks companies. I believe that it has more room to grow in the next few years. It has started this expansion in Canada and is about to move to other countries like Australia, France, Ireland, and the UK.
There are chances that the company will see strong market reception in these countries. Also, its distribution partnership with Pepsi will help it reach these markets at a faster rate.
The only short-term challenge with this international expansion is that it will not be cheap. As a consumer brand, it will need to spend more money in various forms of marketing like influencer, social media, and brand marketing, which will hit its profits.
The other likely catalyst for CELH stock will be its innovation and new product launches. It has already launched Celsius Essentials, Celsius On The Go, and more flavours that are doing well so far.
Analysts still expect that Celsius Holdings will continue to see double-digits growth this year. The expectation is that its annual revenue growth will be $1.72 billion, a 30% increase from the $1.32 billions made in 2022. It will then grow by 29% in 2025 to over $2.2 billion.
CELH stock price analysis
There are two main reasons why the Celsius Holdings stock price tumbled this week. First, it crashed after a report by Nielsen showed that its business was slowing in the United States. This slowdown is to be expected since Celsius has grown sharply in the past few years.
The other reason is technical. On the daily chart above, we see that the CELH share price tumbled after it reached the key resistance at $99.48, which coincided with its highest swing in March. It formed a double-top pattern, which is one of the most popular bearish signs.
The stock has now crashed below the 50-day moving average and is slightly above the 100-day MA. Also, oscillators like the Relative Strength Index (RSI) and the MACD indicators have all pointed downwards.
Therefore, the short-term outlook for the stock is bearish as sellers target the double-top’s neckline at $67.50. This price also coincides with the highest point in September last year.
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