What Happened?

Shares of energy drink company Celsius (NASDAQ: CELH) fell 23.8% in the morning session after the company reported mixed earnings. The company announced impressive year-over-year revenue growth of 173% to $725.1 million, slightly ahead of estimates. Adjusted earnings per share of $0.42 also comfortably beat the consensus forecast. However, investors appeared to focus on the company's deteriorating profitability. Celsius reported a negative operating margin of 11%, a sharp decline from the negative 1.2% margin in the same quarter last year. This drop suggested that operating expenses, such as marketing and administrative costs, grew even faster than its impressive sales, raising concerns about its cost controls and the efficiency of its rapid expansion. Despite the strong top-line performance, the significant pressure on profitability seemed to spook investors, leading to the sharp sell-off.

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What Is The Market Telling Us

Celsius’s shares are extremely volatile and have had 30 moves greater than 5% over the last year. But moves this big are rare even for Celsius and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock gained 39% on the news that the company delivered exceptional fourth quarter 2024 results, which blew past analysts' EBITDA, EPS, and revenue estimates, suggesting the struggles surrounding its controversy with Pepsi, where it oversold inventory to the behemoth, could be approaching the rearview mirror. Separately, the company announced its acquisition of Alani Nu, a popular up-and-coming energy drink brand. Zooming out, we think this was a solid quarter.

Celsius is up 70.4% since the beginning of the year, but at $46.35 per share, it is still trading 28.5% below its 52-week high of $64.86 from October 2025. Investors who bought $1,000 worth of Celsius’s shares 5 years ago would now be looking at an investment worth $5,862.

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