Celsius (CELH) stock is in a deep bear market and I’m buying

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on Dec 22, 2023
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  • Celsius Holdings share price has moved into a bear market.
  • There are concerns about its growth and cost for its global expansion.
  • The company still has a long runway for growth in the US and internationally.

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Celsius Holdings (NASDAQ: CELH) stock price is stuck in a deep bear market as this year’s momentum fades and as more investors start to take profits. After peaking at $70 in September, the stock has plunged by over 27% to $50. This retreat has lowered its market cap to over $11 billion. 

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Why has Celsius Holdings lost momentum

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Celsius Holdings has been one of the top-performing beverage companies this year. While the stock is still in a bear market, it has risen by over 50% as investors cheer its popularity and growing momentum.

This growth was affirmed after the company published strong financial results in November. Also, recent results by Nielsen have shown that the company has grown its market share in the energy drink segment to almost 10%. It lags behind RedBull and Monster, giant companies that spend billions in marketing.

Celsius Holdings has also benefited from its partnership with PepsiCo, which mirrors that of Monster and RedBull. The most recent results revealed that CELH business is doing well as its total revenue rose by 104% to $385 million. 

A key that Celsius has vs Red Bull and Monster is that it has more room to grow its international business. While these companies have a global presence, Celsius makes most of its money in the US. In Q3, its North American revenue rose to $371 million while its international division had just $14 million.

Celsius Holdings has an opportunity to solidify its market share in the United States and international business. As I argued in my last report, it is usually easier for an American company to grow globally than vice versa. Look at companies like Apple and Tesla.

The challenge is that the company needs to invest resources in advertising in the international market, something that is not easy. This explains why the stock has pulled back in the past few weeks.

There are also concerns that the triple-digit growth rate will fade in the coming months. Still, I believe that, while the company is not cheap, that it will bounce back in 2024 as inflation drops and its popularity rises.

CELH stock price analysis

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CELH chart by TradingView

In a recent article on Celsius Holdings, I wrote that its stock was priced for perfection and warned that a pullback was likely. This view was correct as the shares have pulled back in the past few weeks. 

Turning to the daily chart, we see that the CELH share price has found a strong support at the 200-day moving averages. This is a sign that the selling pressure is easing. 

The stock remains above the 50% Fibonacci Retracement level. It has also formed a falling wedge pattern, which is one of the most bullish signs. Therefore, I suspect that the stock will bounce back and initially retest the resistance at $62.90, its highest point on November 7th.

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