CELH stock price analysis: is Celsius a bargain or a value trap now?

Celsius Holdings (CELH) stock is at a crossroads as investors assess whether the recent growth has stalled. After soaring to a record high of $99.50 earlier this year, it has moved into a deep bear market after crashing by over 40%.

Growth concerns remain

Celsius Holdings was one of the best-performing beverage companies in the past two years as its energy drinks gained momentum. 

Its financial results show how quickly the company has been growing. Its annual revenue rose from $75.1 million in 2019 to over $1.318 billion in 2023. It has also become a highly profitable company as its net profit jumped from $10 million in 2019 to over $226 million in 2023.

Celsius Holdings has benefited from viral videos about its drinks and its distribution partnership with PepsiCo, the second-biggest beverage company after Coca-Cola. This partnership is important because it mirrors that of Coca-Cola and Monster Beverages.

The distribution partnership is also crucial because it helps Celsius expand its business without thinking much about distribution. It will also help it reach the international markets without handling the vast logistical challenges associated with it.

Recently, however, there are concerns about whether Celsius Holdings can sustain its momentum. Besides, the energy drink industry has had some popular fads in the past. 

These concerns accelerated after a report by Nielsen showed that sales in the US slowed for the four weeks to June 29th. Its market share also dropped from 9.7% to 10.7% while its velocity declined by mid-teens year-over-year. 

These fears also continued last week after PepsiCo published relatively weak financial results. Its organic sales rose by 1.9% in Q2, lower than the expected 2.9%. Most of this slowdown was in its snack business. In a statement, the CEO noted that US consumers were more challenged as inflation remained high.

Other companies have also warned of a weak consumer. In a report, Conagra Brands said that consumption trends in the US were worrying in the country. Conagra owns brands like Duncan Hines, Healthy Choice, Slim Jim, and Snack Pack.

Analysts expect Celsius growth to slow

In its most recent results in May, Celsius Holdings said that its revenue rose to $355 million in Q1 from $259 million in the same quarter in 2023. Its net income also jumped from $41 million to over $92 million this year. 

Analysts expect that its quarterly revenue will come in at over $401 million, a 23% increase from the same period in 2023. For the third quarter, its guidance is expected to be $477 million while its annual revenue will rise by 27.6% to $1.68 billion. 

In addition to the headline numbers, traders will be watching its international segment for clues on whether it is gaming momentum. 

Analysts are generally bullish about the CELH stock price. 14 of the 16 analysts tracked by Yahoo Finance have a buy or a strong buy rating with one having a hold rating. 

Celsius Holdings stock price analysis

CELH chart by TradingView

The daily chart shows that the CELH stock price formed a double-top chart pattern at $99.48. It then dropped below the neckline at $67.31, its lowest swing in April. 

The stock is about to form a death cross pattern, where the 200-day and 50-day Exponential Moving Averages (EMA). In most cases, this is one of the most bearish signs in the market.

The stock has formed a small double-bottom pattern at $52.40 and a small hammer. Therefore, the stock will likely remain in this range ahead of the upcoming earnings, which is set to happen on August 9th. The key support and resistance points to watch will be at $52.40 and $65.