CELH stock nears a key price as Celsius loses momentum

Celsius Holdings (NASDAQ: CELH) stock price has made a bearish breakout in the past few weeks as the recent momentum eased. After peaking at $68.91 in September, the shares have plunged by over 27% to the current level of $49. It has dropped to the lowest point since August 9th.

Celsius Holdings has evolved from being a small beverage company into one of the biggest players in the industry. Its energy drink has gotten extremely popular, which has pushed its total market cap to over $11 billion. 

Many analysts believe that Celsius is a key threat to Monster, the $50 billion energy drink company. For one, Monster has succeeded over time by partnering with Coca-Cola while Celsius reached a distribution deal with Pepsi. Its market share in the US has risen to 10%, making it the third one after RedBull and Monster.

Celsius Holdings growth was confirmed when it published its financial results recently. As I wrote, CELH revenue rose by 104% in the last quarter to $385 million as its North American business boomed. Revenue in the first nine months of the year jumped by 104% to $476 million.

Celsius growth happened as the company deepened its relationship with companies like Amazon, Dunkin, and Jersey Mike. 

Therefore, a key opportunity for the company is its international market, which is largely untapped. While the company’s international segment grew by 56%, its total revenue was just $14 million. 

The international segment is important because of the market size. For one, there is a huge population in places like Asia and Europe who would be interested in its products. Brands like RedBull and Monster make substantial sums of money internationally. In Monster’s case, the international market accounts for over 40% of sales.

The biggest challenge for Celsius is how it will maintain its growth in the long term. In the past, we have seen many companies come and go as they move from their fad phase. Besides, the company is operating in a highly competitive industry, with hundreds of brands.

CELH chart by TradingView

Turning to the daily chart, we see that the CELH stock price peaked at $68.9 in September and has now moved to below $50. As the stock retreated, it moved below the important support at $55, the 50-day Exponential Moving Average (EMA). It has also slipped below the psychological level of $50. 

At the same time, the Relative Strength Index (RSI) is pointing downwards and is approaching the oversold level of 30. Most notably, the stock is approaching the 200-day moving average at $48. It has also formed a double-top pattern, which I warned about recently. 

Therefore, at this stage, the outlook for the stock is neutral with a bearish bias. A break below the 200-day EMA will point to more downside in the coming months. If this happens, the next point to watch will be at $45, the lowest swing on August 2nd. 

The alternative scenario is where the shares hits the 200-day moving average and then resume the bullish trend. Besides, there are signs that the Federal Reserve will start cutting rates in 2024, which will be a good thing for growth stocks.