
Fitness beverage company
Celsius Holdings, Inc. (NASDAQ: CELH) stock experienced a monster rally this year handily outperforming the benchmark
S&P 500 index (NYSEARCA: SPY). The controversial maker of workout and
energy drinks as been a subject of short-sellers with allegations of channel stuffing and various misleading acts. Nimble traders and active investors that understand the risks associated with this company may look for opportunistic pullback entries with risk capital to play the coils.
Q2 FY 2020 Earnings Release
On Aug. 6, 2020, OraSure released its fiscal second-quarter 2020 results for the quarter ending June 2020. The Company reported an earnings-per-share (EPS) profit of $0.02 excluding non-recurring items versus consensus analyst estimates for a loss of (-$0.01), beating estimates by -$0.02. Revenues grew by 86.4% year-over-year (YoY) to $30.04 million beating analyst estimates by $5.83 million. Domestic revenues grew 44% to $20.8 million and international revenues exploded 441.2% YoY to $9.2 million. Gross profit was $13 million up 88.4% YoY. Net income was $1.5 million compared to a loss of (-$1.5 million) YoY. The Company secured more distribution with partners Anheuser-Busch Inbev (NYSE: BUD), PepsiCo (NYSE: PEP), Keurig Dr. Pepper (NYSE: KDP) and Molson Coors (NYSE: TAP) networks bringing total national direct store distribution partners to over 135, up from 100 in Q1 2020.
CELSIUS distribution in the U.S. has crossed the 74,000 retail locations market. The Company is experiencing hypergrowth thanks to expanded distribution as a result of growing demand for its gluten-free, sugar-free workout and energy drinks. The Company ended the quarter with $20.1 million in cash and working capital of $31.8 million. Cash used in the first six months total $4.3 million reflecting higher inventory levels and working capital.
Conference Call Takeaways
CEO of Celsius Holdings, John Fieldly, expounded on the momentum despite COVID-19 disruptions in the quarter. Fieldly summed up the mission, “to reach more consumer through wider distribution, improve margins through cost and operational improvements and increase out brand recognition globally.” The Company CELSIUS energy drinks have outpaced the category with 46.5% YoY growth in the convenience channel. The pandemic disrupted distribution channels mainly health club specialty vending and boost service channels. This segment usually accounts for 20% to 25% of U.S. revenues was literally shut down. However, customers shifted their purchasing to online and grocery distribution channels resulting in not just offsetting channel losses but triggering record growth in those channels. The Company launched newest flavor Peach Vibe, which was ranked #1 new release on Amazon’s (NASDAQ: AMZN)energy drink category. With gyms closed, the Company launched SWEAT WITH CELSIUS live three-day weekly stream workout program helping to grow and interact with its 100,000+ Instagram (NASDAQ: FB) followers.
Private Offering and Target Stores
On Aug. 20, 2020, Celsius Holdings commenced a private placement investment with a leading private equity firm in Asia and a global institutional investor for 1.44 million shares at $15.30 per share. The $22 million proceeds will be used to eliminate outstanding bonds incurred with the October 2019 acquisition of Fund Food Group Oyj and provide addition working capital. On Sept.17, 2020, Celsius Holdings announced the conversion of over 1,100 Target (NYSE: TGT) stores to its Direct Store Delivery (DSD) distribution network. Transition key accounts to DSD has proven to bolster sales volume driving sales volume as high as 100% at certain retailers. Maxim Group upgraded shares of CELH to a $30 price target on Oct. 6, 2020.
CELH Opportunistic Pullback Levels
Using the rifle charts on the monthly and weekly time frames provides a broader view of the landscape for CELH stock. The monthly rifle chart has made a full stochastic oscillation that’s stalling above the 80-band after tagging the upper monthly Bollinger Bands (BBs) at the $24.42 Fibonacci (fib) level. The monthly 5-period moving average support is still trying to catch up at the $18.09 range fib. The weekly rifle chart is attempting to form a pup breakout if the weekly stochastic can cross back up triggering the weekly market structure low (MSL) above $21.66. However, the weekly stochastic may be floundering here forming a cross down which can provide nimble traders opportunistic pullback levels at the $18.97 combo fib, $10.81 fib, $17.50 fib and the $15.42 fib. The bar is clearly set very high heading into the earnings report, so it’s a good idea to administer patience in case of a sell-the-news reaction that can provide better pullback levels for exposure.
Companies in This Article: