The same arguments were made about Coke in a crowded cola market. Celsius has built an amazing differentiated brand in the health wellness category over many years. I think you are underestimating the power of brand. Monster and Red Bull have their own target which is very different from Celsius.
Yes, back when Coca-Cola was founded in 1892 there were loads of people on the Internet making the same claims. You're trying to make an apples to oranges comparison, and if you watched the video you'd know why the comparison doesn't hold water - or flavored water with 7 vitamins that magically burns calories so you don't have to. ;)
I guess I'm still trying to understand how it's apples to oranges? Most great brands came up through crowded markets (Apple - PC, Coke\Pepsi - Soda, MCD - Fast Food). Coke\Pepsi obviously view this space as a critical category, hence their investments. Coke even tried its hand with its own product and backed out as it couldn't gain traction. I understand the single brand risk and that makes sense but I think most companies are now in that position (see Disney, Target, Bud Light). The intl play not taking off is another risk that I understand but we know Celsius is going to get more shelf space and they are #1 on Amazon (level playing field) so there is a world they do really well.
@clouddeveloper4549 Coke is not a single brand. Bud Light is not a single brand. Target is unrelated. The comparisons you're making here seem vague and not well thought through. If you want to debate the merits of a stock, you can't just spout forth verbose paragraphs of loosely related sentences and expect to have a productive discussion. It's very difficult trying to digest whatever points (points?) you're trying to make here, none of which seem to be addressing the points of contention raised in the video. Yes, we said KO and PEP are making lots of investments here. Not sure if we mentioned KO's failed attempt at launching their own energy drink but that's useful for people to know, good point!
@@Nanalyze, of course they aren't single brands today, but they all started from the same place. That's what I was comparing. They were all good investments early on before they were multi-brand conglomerates. I'm not slamming you or your video content but was just trying to understand if you thought about it from that angle
@@clouddeveloper4549 Hey man. Joe P. here. (Presenter.) We tend to be abrasive in the comments sometimes because we just don't have a lot of time and want to keep things tight. In reading back over your comments, I see you're trying to understand our responses and not just be argumentative or spout random bullish points. Sometimes we just don't have time to really go explaining things in detail, but we're here to help when we can. Really hard to say what KO or PEP looked like early days. We can look at Monster (presumably an advanced Celsius if you will). They have already started down the KO path by expanding into other alternative beverages (not overly successfully though). So, for Celsius - or any other brand - to have KO success, they'll need to really get away from that single brand risk. Thank you for taking the time to engage!
Thanks for the analysis! Valid concerns, but the growth numbers speak for themselves at the moment. Monster was the best growth stock of the last 15 years, I 100 bagger in 10 years and I think celsius has a few advantages (healthy approach, 7 vitamins, no artificial sugar, the flavor is not that strong but still tasty and it attracts women to buy it as well, that's not the case with monster or redbull so much. They start expanding in Europe. Here in Switzerland it has 2 flavors in the shop. Could be the growth stops immediately but my feeling is it gets at least to half the MC of monster. I think over 10 to 15 years it might even surpass monster because of the fitness and female attracting aspect. no financial advice of course :)
You're quite welcome! We don't invest in stocks, we invest in companies. The video specifically talks about not looking back at historical performance of stocks as some indicator of future success. There is no intellectual property preventing any other energy drink maker from offering the same sort of "healthy" beverage. Investors should pay attention to how growth responds to a pull back on all those heavy marketing expenses.
@Nanalyze absolutely, growth should remain strong for it to be a success story, although monster never grew this strong. If they can manage to establish a high brand awareness, with reduced marketing spend, it will be a success story. Of course other brands can take the healthy approach too, yet nobody is on that path and the market opportunity seems well with a good TAM and growing. Not just one winner.
I've been long since 40 pre split a few years ago. I think you're underestimating the quality of the product and the strength of their marketing with women in particular. Celsius is here to stay and I expect it to continue to gain market share from competitors for years to come and establish itself as a premium brand in the market. I understand you're a more conservative investor but from time to time you'll miss out on a big winner like this. IMO if you haven't bought a few cans of Celsius you haven't done the research.
People's personal opinions of the product aside, yes, the product is great, and so are the other 920 products it competes with. That's what the sheep are constantly being told by the massive amounts of marketing spend that's being sunk into promoting these products to men, women, and everyone in between. That doesn't address any of the concerns raised in the video. You can expect it to continue gaining market share, but those expectations and $5 might get you two cans of Celsius ;) There is no moat here, whether you're conservative or an aggressive investor. And FOMO isn't something you'll find much of around here at Nanalyze ;)
@@Nanalyze It's not just marketing. They have a fanatical customer base. The other drinks aren't growing like CELH no matter the market spend. This is a lesson I learned not investing in CMG. The customer love factor. A cult like following is a competitive advantage.
Do you have some surveys or formal proof of all this love, this cult-like following, that you can share with everyone? As the video points out, Celsius is spending twice the overhead Monster is which can create a lot of perceived love. They also have lower gross margins making it tougher to compete on price. Consumers are fickle. They always have been. That's evident in the fact that you have all these brands vying for their attention. EDIT: You may be observing this cult following, and that's useful to know, but ideally we like to see these things backed up with some proof. Admittedly, it might be hard to prove!
@@Nanalyze Yah just go to a college bar and start asking women. The following is real and they have doubled their sales several years in a row. It isn't just marketing, there is something here.
By your logic, what MOAT does Monster have? All the reasons why Monster has done so well this past decade are valid reasons for Celsius this upcoming decade. If you had the chance to invest in Monster in 2010, would you? That's the opportunity presented right now. The forward looking nature of the market will mean Celsius will continue to be a street favorite as long as revenue/growth continue Y/Y.
Energy drinks don't have a moat. That was the entire point of the video. To automatically assume one company follows the same trajectory as a similar company is a common mistake newbie investors make.
A very in-depth analysis, thanks for sharing, I enjoyed it a lot; Do you have a podcast by the way, I’d like to subscribe if there is; Thanks again, have a nice day!
Thank you for the kind words! The only reason we covered this is because it's being hyped so much. That's never good. Our own investment mandate means this would never be on our radar, so we have no dog in the race. Yes, it's growing like mad, yes, the product burns calories and cures cancer, yes they are attracting the pink dollar, these and all the other bullish talking points are covered ad nauseum in dozens of YT videos out there. We simply approached this as a case study - as any good MBA would - and looked for reasons why this might not be a good investment for long-term horizon investors.
Not a commentary on Celsius, I agree lack of moat and changes in consumers tastes and preferences make this an unlikely winner in the long run. However, Monster has the highest total return of any stock over the last 30 years, at about 470,000%. This compares to famously over valued companies like Tesla which has increased by 15,000%. Likely, due to the improbabilities of success breaking into essentially a duopoly beverage market resulted in a very low valuation at IPO
Regarding the performance number, here's from an article by U.S. News last summer: "Monster Beverage has been an under-the-radar home-run investment since its 1990 IPO. In 30 years, Monster has generated a total return, which includes dividends, of 191,852% - making it the best-performing S&P 500 stock of the past three decades." After their bankruptcy in 1988, it was likely that investors viewed them with some degree of suspicion, and then they actually were able to successfully pivot into something that worked. What investors today will do is make the mistake of assuming that Celsius will automagically replicate that success.
@@Nanalyze yes, I agree. For the reasons you mentioned above. I feel the same for apparel. New entrants like On holdings competing with Nike. They could succeed, but they have no moats/competitive advantages, and compete in an area with entrenched dominant players with deep competitive advantages
Joe thanks for covering this. Since you invest in market leaders, as a thought experiment given the choice would you invest in monster (the market leader in energy ) over Celsius? I noticed that Celsius has taken the number one sales spot on Amazon in energy from Monster recently and looks to take share in the near term.
You're quite welcome! We just wouldn't invest in any energy drink makers. As the video structure shows, we start at the top and look at the industry classification. The leader in this niche is the one with 21 billion-dollar products that has not only paid but increased its dividend for over 50 years. Pepsi is also a clear leader. KO is a stock that behaves as a bond with a coupon that increases over time. Since our investment horizon is measured in decades, we'll stick with the leaders that will undoubtedly be around when fickle Joe Consumer jumps on the next "alternative beverage" bandwagon. :)
Your presentation made a clear bear thesis for the energy drink category and your preference for choosing the “apex predator” in alternative beverages. It was pretty clear that the lack of moat and fickle nature of consumers along with the need for marketing spend causes you to stay away etc. So you can on record as not putting your own money into these names. My teens to play a game called “would you rather” which is a thought experiment where you are forced to choose between two scenarios you don’t like. (I.e. would you rather loose the ability to run or loose the ability to drive). So I’m asking specifically would you rather monster the proven leader possibly loosing market share vs Celsius growing faster taking share but less brand recognition.
The presentation looks at facts, and interprets the business and competitive situation using academic frameworks, among other things analyzed. We did not present a bear thesis for the energy drink category, we simply proposed that all the perma-bulls out there parroting the same talking points consider the business through the lens of MBAs who paid way too much money to learn how to deconstruct this stuff. We covered the topic because people who paid our bills asked us to. As for playing "what if" games, there's an interesting psychological phenomenon where people who invest with "play money" tend to make decisions completely differently than those who have to invest with "real money." Therefore the returns people make with "play money" are completely irrelevant. Same holds true for fictional decision making. That said, this is the sort of question we'll happily answer for paying subscribers on our Discord server ;)
No investment is going to be perfect. If they have a good product and are growing, the stock is going to be expensive, or look expensive. It's better to ask, will this company be making even more money 3-5 years from now? If the answer is yes, start a position and average down aggressively if the opportunity happens. That's the way I'm playing this one. Thanks for the video and insight and content.
Marketing and brand influence is the most important part of this space. People will buy what they see most advertised and also a majority of other people are drinking. People don’t scan labels for this kind of product it’s something they quick grab at the gas station while paying at the pump.
Seems to be the case! Celsius is spending twice as much on operating expenses as Monster so this growth is to be expected. As the history of energy drinks shows us, consumers are easily swayed and fickle.
It's hard to analyze companies like this. They are the new kids on the block, can they make it? Looking at the bottom line kinda dont work either. Revenue is a good indecstor and looking at the people on top, do you belive in them? But most of all i think this will rise or fall on the taste, is it any good comparing it to redbull and monster? I am in Norway so i don't have that opertunity. But if i felt it tastedlike poo, i would never buy the stock
Admittedly, this falls outside the scope of our two mandates - disruptive growth and dividend growth. Assessing the caliber of management is tough unless you work directly with these people. Strong revenue growth is a good indicator of traction, but how sustainable is it in a highly competitive space with no moats? Most people seem to love the product but is it more about marketing than substance? We think so. BTW, you come from a beautiful (but expensive) country ;) Welcome!
@@Nanalyze Sorry but i am new to your channel, is it only divident stocks you go after? And sorry about the spelling, autocorrect is not in English 😂. I agree its hard to assess people, but hearing them speak ect you kinda make your mind on them and if they have a track record. If its a good product and they have decent people on top they will take portions from the others, if they surpass them is a different story. My guess is that they don't have much outside US, since i have never heard about them before today. Started with stocks and analyze 1 year ago, but i only go after growing companys i belive in and don't look at divident. It is nice her and dam expensive for sure 😂
We cover disruptive growth stocks and dividend growth stocks - two sides of the risk spectrum. The majority of our assets are in dividend growth stocks (our Quantigence strategy). You're a capable communicator, don't worry! Our approach is to read earnings call transcripts. It saves time and you can avoid the charm/charisma that many execs use to persuade investors (glorified salespeople at times). Celsius is only now expanding internationally, so we'll see how their marketing value proposition (healthy energy drink - burn calories doing nothing) flies in other cultures.
Man... It's another one of those cases where I'm certain it'll do fine in the long term. But I missed the boat cuz of all the hype and would've liked to have it in maybe the low to mid $30s. 😑 I don't see it as a $60 just yet.
Fund providers like Fidelity, Vanguard, and BlackRock either track indices or take very broad-market approaches to investing so we don't typically like to put too much weight into their holdings, but that's an interesting observation nonetheless! Thanks for the comment! -Wyatt C.
1. based on the last 10Q of Celsius their top line had a significant increase of 104% with COGS at 77%. Meanwhile, GM grew over 200% YOY. 2. sure Monster's COGS was roughly 6% per their last 10Q but the brand has capitalized already and is more mature. I don't think it is valid comparing the two. Especially when Celsius is going through a growing phase. It is completely flawed to say celsius is spending more money, hence, it is growing at a fast rate! 3. Your analysis puts very little focus on the company's financials performance which ties up to the whole fundamental of the company. Which i understand, past performance is not an indicator of future success-- if this was said then all companies out there applies here. Apple's success in future cannot be judged by its past performance.. but im sure 90% of Americans will say they believe Apple is here to stay. 4. Celsius is not just an energy drink- it is a lifestyle. It is a caffeinated beverage. If you think they have no MOAT.. then look at starbucks. People line up every morning to get their coffee. You have people drinking Celsius for various reasons-- the gym goers, the professionals like CPA, Lawyers, Doctors etc. especially the pricing is cheaper than a cup of coffee. No one just wakes up one day and say im giving up Caffeine.
Your points: 1) Everyone knows about the growth. This is crammed down everyone's throat by hundreds of pundits pumping the stock. That's not what this is about. 2) You completely missed the points made in the video about operating expenses. The point is extremely valid. Your decision to overlook that is flawed. 3) This wasn't about past historical performance. There are hundreds of pundits out there talking about that. This video wasn't about that. Why you decide to suddenly bring up Apple is irrelevant and just a bad comparison. 4) Yes, we know about the lifestyle. Burns calories, 7 vitamins, chicks dig it, we've heard people talking about that ad nauseum. They have no moat. That's a fact, whether you like to hear about it or not. Starbucks is apples to oranges - yet another apples to oranges comparison from people who just can't stomach hearing a critical analysis of their sacred cow.
@@Nanalyze operating expenses.. that is less important than COGS when it comes to measuring the profitability of the company. I want to know their direct costs associating with the production of the product. Operating costs is not a direct costs and cannot be measured on production, yet varies. It is an important component of FS. But back to their last earnings report everything is stellar on the company so far and to that reason i remain bullish on this company. Moreover, i believe COGS is more valid measurement for Celsius due to it being a product-- producing a can of energy drink and the costs associated. Versus operating expenses such as marketing and what other line items they may have that can be 1 time costs. As long the GM and Net profit numbers are solid i am not concern of this company.
@Jeff-kb8iv Makes sense Jeff. We tend to agree with you on the COGS statement. That's how we look at companies. However, we cannot dismiss that Celsius has more than double the operating expenses of Monster (and nearly double of KO) and that just might be contributing to all that stellar growth we're seeing. Take the foot off the gas pedal and what might happen?
@@Nanalyze Not sure where you are seeing Celsius having double opex of Monster? In 2023-Q3 their opex was 25% of revenue, significantly lower than the 2022 numbers you presented. In fact, all 3 quarters were below 30% of revenue. Also Celsius gross margin in Q3 2023 was 50.4% I think you are just looking at old (2022) numbers
@@Martinit0 The analysis was based on whatever full-year numbers were readily available to use for comparing both companies. A cursory look shows trailing twelve months are above 30% for Celsius. We use Yahoo Finance as a data source, something everyone can easily access.
Well while one has valid concerns about a specific company in the sector, it is clear that the sector or flavored and energy drinks is exploding. So why not buy a few of the most successful of the companies in the sector (form your own ETF if you want) and enjoy the long-term ride by rebalancing when needed.
Terms like "exploding" don't do much. Energy drinks are popular, and popularity is subject to the whims of a fickle crowd led around by their noses by whichever firm spends more marketing dollars. It's impossible to create an ETF when there are only a handful of companies dabbling. There is no guarantee of a "long-term ride," which is the point the video was making. There are no moats here, one of the many points made in the video that many commenters seem to be ignoring.
@@Nanalyze I agree on the moats point. However I do not see the material difference to Pepsi and Coca Cola, which arguably are some of the strongest brands in the world. My comment regarding "exploding" is about the growing popularity of flavored and energy drinks with the younger generation (
@@andreinedelcu5330 Coke, for example, has 21 billion-dollar or more brands in their portfolio. Trying to compare Celsius to Coke is apples to oranges. Yes, energy drinks happen to be the popular drinks du jour. There is no moat. Winners change based on the whims of the fickle customers marketing people peddle them to. Again, there are no moats in this business. There are no switching costs. Celsius is spending A LOT more than comparable companies pushing these drinks so it's no surprise they should see sales growth. We'll see if that persists when they stop spending so much on marketing. Customers are fickle. The entire history of energy drinks shows that. There's nothing magical about expensive flavored water with 7 vitamins.
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The same arguments were made about Coke in a crowded cola market. Celsius has built an amazing differentiated brand in the health wellness category over many years. I think you are underestimating the power of brand. Monster and Red Bull have their own target which is very different from Celsius.
Yes, back when Coca-Cola was founded in 1892 there were loads of people on the Internet making the same claims. You're trying to make an apples to oranges comparison, and if you watched the video you'd know why the comparison doesn't hold water - or flavored water with 7 vitamins that magically burns calories so you don't have to. ;)
I guess I'm still trying to understand how it's apples to oranges? Most great brands came up through crowded markets (Apple - PC, Coke\Pepsi - Soda, MCD - Fast Food). Coke\Pepsi obviously view this space as a critical category, hence their investments. Coke even tried its hand with its own product and backed out as it couldn't gain traction. I understand the single brand risk and that makes sense but I think most companies are now in that position (see Disney, Target, Bud Light). The intl play not taking off is another risk that I understand but we know Celsius is going to get more shelf space and they are #1 on Amazon (level playing field) so there is a world they do really well.
@clouddeveloper4549 Coke is not a single brand. Bud Light is not a single brand. Target is unrelated. The comparisons you're making here seem vague and not well thought through. If you want to debate the merits of a stock, you can't just spout forth verbose paragraphs of loosely related sentences and expect to have a productive discussion. It's very difficult trying to digest whatever points (points?) you're trying to make here, none of which seem to be addressing the points of contention raised in the video. Yes, we said KO and PEP are making lots of investments here. Not sure if we mentioned KO's failed attempt at launching their own energy drink but that's useful for people to know, good point!
@@Nanalyze, of course they aren't single brands today, but they all started from the same place. That's what I was comparing. They were all good investments early on before they were multi-brand conglomerates. I'm not slamming you or your video content but was just trying to understand if you thought about it from that angle
@@clouddeveloper4549 Hey man. Joe P. here. (Presenter.) We tend to be abrasive in the comments sometimes because we just don't have a lot of time and want to keep things tight. In reading back over your comments, I see you're trying to understand our responses and not just be argumentative or spout random bullish points. Sometimes we just don't have time to really go explaining things in detail, but we're here to help when we can. Really hard to say what KO or PEP looked like early days. We can look at Monster (presumably an advanced Celsius if you will). They have already started down the KO path by expanding into other alternative beverages (not overly successfully though). So, for Celsius - or any other brand - to have KO success, they'll need to really get away from that single brand risk. Thank you for taking the time to engage!
Thanks for the analysis! Valid concerns, but the growth numbers speak for themselves at the moment. Monster was the best growth stock of the last 15 years, I 100 bagger in 10 years and I think celsius has a few advantages (healthy approach, 7 vitamins, no artificial sugar, the flavor is not that strong but still tasty and it attracts women to buy it as well, that's not the case with monster or redbull so much. They start expanding in Europe. Here in Switzerland it has 2 flavors in the shop. Could be the growth stops immediately but my feeling is it gets at least to half the MC of monster. I think over 10 to 15 years it might even surpass monster because of the fitness and female attracting aspect. no financial advice of course :)
You're quite welcome! We don't invest in stocks, we invest in companies. The video specifically talks about not looking back at historical performance of stocks as some indicator of future success. There is no intellectual property preventing any other energy drink maker from offering the same sort of "healthy" beverage. Investors should pay attention to how growth responds to a pull back on all those heavy marketing expenses.
@Nanalyze absolutely, growth should remain strong for it to be a success story, although monster never grew this strong. If they can manage to establish a high brand awareness, with reduced marketing spend, it will be a success story. Of course other brands can take the healthy approach too, yet nobody is on that path and the market opportunity seems well with a good TAM and growing. Not just one winner.
I've been long since 40 pre split a few years ago. I think you're underestimating the quality of the product and the strength of their marketing with women in particular. Celsius is here to stay and I expect it to continue to gain market share from competitors for years to come and establish itself as a premium brand in the market. I understand you're a more conservative investor but from time to time you'll miss out on a big winner like this. IMO if you haven't bought a few cans of Celsius you haven't done the research.
People's personal opinions of the product aside, yes, the product is great, and so are the other 920 products it competes with. That's what the sheep are constantly being told by the massive amounts of marketing spend that's being sunk into promoting these products to men, women, and everyone in between. That doesn't address any of the concerns raised in the video. You can expect it to continue gaining market share, but those expectations and $5 might get you two cans of Celsius ;) There is no moat here, whether you're conservative or an aggressive investor. And FOMO isn't something you'll find much of around here at Nanalyze ;)
@@Nanalyze It's not just marketing. They have a fanatical customer base. The other drinks aren't growing like CELH no matter the market spend. This is a lesson I learned not investing in CMG. The customer love factor. A cult like following is a competitive advantage.
Do you have some surveys or formal proof of all this love, this cult-like following, that you can share with everyone? As the video points out, Celsius is spending twice the overhead Monster is which can create a lot of perceived love. They also have lower gross margins making it tougher to compete on price. Consumers are fickle. They always have been. That's evident in the fact that you have all these brands vying for their attention.
EDIT: You may be observing this cult following, and that's useful to know, but ideally we like to see these things backed up with some proof. Admittedly, it might be hard to prove!
@@Nanalyze Yah just go to a college bar and start asking women. The following is real and they have doubled their sales several years in a row. It isn't just marketing, there is something here.
So college bars and women. Got it. We'll get right on that ;)
By your logic, what MOAT does Monster have? All the reasons why Monster has done so well this past decade are valid reasons for Celsius this upcoming decade. If you had the chance to invest in Monster in 2010, would you? That's the opportunity presented right now. The forward looking nature of the market will mean Celsius will continue to be a street favorite as long as revenue/growth continue Y/Y.
Energy drinks don't have a moat. That was the entire point of the video. To automatically assume one company follows the same trajectory as a similar company is a common mistake newbie investors make.
It's too expensive of a P/E for my taste. That being said, if I *do* buy an energy drink, you best believe I'm buying a Celcius!
Lots of fans out there of the product!
A very in-depth analysis, thanks for sharing, I enjoyed it a lot;
Do you have a podcast by the way, I’d like to subscribe if there is;
Thanks again, have a nice day!
Thank you for the feedback! The audio for all our videos is published on Spotify as a podcast. Just search for Nanalyze.
Fantastic Analysis. I love the unique insight to help wade through the hype.
Thank you for the kind words! The only reason we covered this is because it's being hyped so much. That's never good. Our own investment mandate means this would never be on our radar, so we have no dog in the race. Yes, it's growing like mad, yes, the product burns calories and cures cancer, yes they are attracting the pink dollar, these and all the other bullish talking points are covered ad nauseum in dozens of YT videos out there. We simply approached this as a case study - as any good MBA would - and looked for reasons why this might not be a good investment for long-term horizon investors.
Big like for the video.
Thank you for the feedback!
Not a commentary on Celsius, I agree lack of moat and changes in consumers tastes and preferences make this an unlikely winner in the long run. However, Monster has the highest total return of any stock over the last 30 years, at about 470,000%. This compares to famously over valued companies like Tesla which has increased by 15,000%. Likely, due to the improbabilities of success breaking into essentially a duopoly beverage market resulted in a very low valuation at IPO
Regarding the performance number, here's from an article by U.S. News last summer: "Monster Beverage has been an under-the-radar home-run investment since its 1990 IPO. In 30 years, Monster has generated a total return, which includes dividends, of 191,852% - making it the best-performing S&P 500 stock of the past three decades." After their bankruptcy in 1988, it was likely that investors viewed them with some degree of suspicion, and then they actually were able to successfully pivot into something that worked. What investors today will do is make the mistake of assuming that Celsius will automagically replicate that success.
@@Nanalyze yes, I agree. For the reasons you mentioned above. I feel the same for apparel. New entrants like On holdings competing with Nike. They could succeed, but they have no moats/competitive advantages, and compete in an area with entrenched dominant players with deep competitive advantages
@@Ghjgdsfh764 True. We take an "invest in leaders" approach because the leaders usually always come out ahead.
Hanson was the first I believe. They changed their name 20 years ago to their best selling beverage ..Monster
Never knew Monster was originally called Hansen's! Pretty solid rebrand in our opinion.
Joe thanks for covering this. Since you invest in market leaders, as a thought experiment given the choice would you invest in monster (the market leader in energy ) over Celsius? I noticed that Celsius has taken the number one sales spot on Amazon in energy from Monster recently and looks to take share in the near term.
You're quite welcome! We just wouldn't invest in any energy drink makers. As the video structure shows, we start at the top and look at the industry classification. The leader in this niche is the one with 21 billion-dollar products that has not only paid but increased its dividend for over 50 years. Pepsi is also a clear leader. KO is a stock that behaves as a bond with a coupon that increases over time. Since our investment horizon is measured in decades, we'll stick with the leaders that will undoubtedly be around when fickle Joe Consumer jumps on the next "alternative beverage" bandwagon. :)
Your presentation made a clear bear thesis for the energy drink category and your preference for choosing the “apex predator” in alternative beverages. It was pretty clear that the lack of moat and fickle nature of consumers along with the need for marketing spend causes you to stay away etc. So you can on record as not putting your own money into these names. My teens to play a game called “would you rather” which is a thought experiment where you are forced to choose between two scenarios you don’t like. (I.e. would you rather loose the ability to run or loose the ability to drive). So I’m asking specifically would you rather monster the proven leader possibly loosing market share vs Celsius growing faster taking share but less brand recognition.
The presentation looks at facts, and interprets the business and competitive situation using academic frameworks, among other things analyzed. We did not present a bear thesis for the energy drink category, we simply proposed that all the perma-bulls out there parroting the same talking points consider the business through the lens of MBAs who paid way too much money to learn how to deconstruct this stuff. We covered the topic because people who paid our bills asked us to.
As for playing "what if" games, there's an interesting psychological phenomenon where people who invest with "play money" tend to make decisions completely differently than those who have to invest with "real money." Therefore the returns people make with "play money" are completely irrelevant. Same holds true for fictional decision making. That said, this is the sort of question we'll happily answer for paying subscribers on our Discord server ;)
No investment is going to be perfect. If they have a good product and are growing, the stock is going to be expensive, or look expensive. It's better to ask, will this company be making even more money 3-5 years from now? If the answer is yes, start a position and average down aggressively if the opportunity happens. That's the way I'm playing this one. Thanks for the video and insight and content.
You're most welcome!
Marketing and brand influence is the most important part of this space. People will buy what they see most advertised and also a majority of other people are drinking. People don’t scan labels for this kind of product it’s something they quick grab at the gas station while paying at the pump.
Seems to be the case! Celsius is spending twice as much on operating expenses as Monster so this growth is to be expected. As the history of energy drinks shows us, consumers are easily swayed and fickle.
I love how you analyze stock ( a seemingly boring topic )but are very in tune with pop culture a la "apex predator". Not a jab at you btw
Thank you for the feedback! It's important to try and make what can often be quite boring topics interesting and engaging or people (us) tune out. ;)
It's hard to analyze companies like this. They are the new kids on the block, can they make it? Looking at the bottom line kinda dont work either. Revenue is a good indecstor and looking at the people on top, do you belive in them? But most of all i think this will rise or fall on the taste, is it any good comparing it to redbull and monster? I am in Norway so i don't have that opertunity. But if i felt it tastedlike poo, i would never buy the stock
Admittedly, this falls outside the scope of our two mandates - disruptive growth and dividend growth. Assessing the caliber of management is tough unless you work directly with these people. Strong revenue growth is a good indicator of traction, but how sustainable is it in a highly competitive space with no moats? Most people seem to love the product but is it more about marketing than substance? We think so. BTW, you come from a beautiful (but expensive) country ;) Welcome!
@@Nanalyze Sorry but i am new to your channel, is it only divident stocks you go after? And sorry about the spelling, autocorrect is not in English 😂. I agree its hard to assess people, but hearing them speak ect you kinda make your mind on them and if they have a track record. If its a good product and they have decent people on top they will take portions from the others, if they surpass them is a different story. My guess is that they don't have much outside US, since i have never heard about them before today. Started with stocks and analyze 1 year ago, but i only go after growing companys i belive in and don't look at divident. It is nice her and dam expensive for sure 😂
We cover disruptive growth stocks and dividend growth stocks - two sides of the risk spectrum. The majority of our assets are in dividend growth stocks (our Quantigence strategy). You're a capable communicator, don't worry! Our approach is to read earnings call transcripts. It saves time and you can avoid the charm/charisma that many execs use to persuade investors (glorified salespeople at times). Celsius is only now expanding internationally, so we'll see how their marketing value proposition (healthy energy drink - burn calories doing nothing) flies in other cultures.
Man... It's another one of those cases where I'm certain it'll do fine in the long term.
But I missed the boat cuz of all the hype and would've liked to have it in maybe the low to mid $30s. 😑
I don't see it as a $60 just yet.
No FOMO ;)
@@Nanalyze haaaaaaaaaaa 👉👉
Fidelity has been a huge investor in Celsius for years.
Fund providers like Fidelity, Vanguard, and BlackRock either track indices or take very broad-market approaches to investing so we don't typically like to put too much weight into their holdings, but that's an interesting observation nonetheless! Thanks for the comment! -Wyatt C.
Always differentiate between active and passive investing. We covered that here: ua-cam.com/video/UWNVuZ8wixY/v-deo.html
1. based on the last 10Q of Celsius their top line had a significant increase of 104% with COGS at 77%. Meanwhile, GM grew over 200% YOY.
2. sure Monster's COGS was roughly 6% per their last 10Q but the brand has capitalized already and is more mature. I don't think it is valid comparing the two. Especially when Celsius is going through a growing phase. It is completely flawed to say celsius is spending more money, hence, it is growing at a fast rate!
3. Your analysis puts very little focus on the company's financials performance which ties up to the whole fundamental of the company. Which i understand, past performance is not an indicator of future success-- if this was said then all companies out there applies here. Apple's success in future cannot be judged by its past performance.. but im sure 90% of Americans will say they believe Apple is here to stay.
4. Celsius is not just an energy drink- it is a lifestyle. It is a caffeinated beverage. If you think they have no MOAT.. then look at starbucks. People line up every morning to get their coffee. You have people drinking Celsius for various reasons-- the gym goers, the professionals like CPA, Lawyers, Doctors etc. especially the pricing is cheaper than a cup of coffee. No one just wakes up one day and say im giving up Caffeine.
Your points:
1) Everyone knows about the growth. This is crammed down everyone's throat by hundreds of pundits pumping the stock. That's not what this is about.
2) You completely missed the points made in the video about operating expenses. The point is extremely valid. Your decision to overlook that is flawed.
3) This wasn't about past historical performance. There are hundreds of pundits out there talking about that. This video wasn't about that. Why you decide to suddenly bring up Apple is irrelevant and just a bad comparison.
4) Yes, we know about the lifestyle. Burns calories, 7 vitamins, chicks dig it, we've heard people talking about that ad nauseum. They have no moat. That's a fact, whether you like to hear about it or not. Starbucks is apples to oranges - yet another apples to oranges comparison from people who just can't stomach hearing a critical analysis of their sacred cow.
@@Nanalyze operating expenses.. that is less important than COGS when it comes to measuring the profitability of the company. I want to know their direct costs associating with the production of the product. Operating costs is not a direct costs and cannot be measured on production, yet varies. It is an important component of FS. But back to their last earnings report everything is stellar on the company so far and to that reason i remain bullish on this company.
Moreover, i believe COGS is more valid measurement for Celsius due to it being a product-- producing a can of energy drink and the costs associated. Versus operating expenses such as marketing and what other line items they may have that can be 1 time costs. As long the GM and Net profit numbers are solid i am not concern of this company.
@Jeff-kb8iv Makes sense Jeff. We tend to agree with you on the COGS statement. That's how we look at companies. However, we cannot dismiss that Celsius has more than double the operating expenses of Monster (and nearly double of KO) and that just might be contributing to all that stellar growth we're seeing. Take the foot off the gas pedal and what might happen?
@@Nanalyze Not sure where you are seeing Celsius having double opex of Monster? In 2023-Q3 their opex was 25% of revenue, significantly lower than the 2022 numbers you presented. In fact, all 3 quarters were below 30% of revenue.
Also Celsius gross margin in Q3 2023 was 50.4%
I think you are just looking at old (2022) numbers
@@Martinit0 The analysis was based on whatever full-year numbers were readily available to use for comparing both companies. A cursory look shows trailing twelve months are above 30% for Celsius. We use Yahoo Finance as a data source, something everyone can easily access.
Well while one has valid concerns about a specific company in the sector, it is clear that the sector or flavored and energy drinks is exploding. So why not buy a few of the most successful of the companies in the sector (form your own ETF if you want) and enjoy the long-term ride by rebalancing when needed.
Terms like "exploding" don't do much. Energy drinks are popular, and popularity is subject to the whims of a fickle crowd led around by their noses by whichever firm spends more marketing dollars. It's impossible to create an ETF when there are only a handful of companies dabbling. There is no guarantee of a "long-term ride," which is the point the video was making. There are no moats here, one of the many points made in the video that many commenters seem to be ignoring.
@@Nanalyze I agree on the moats point. However I do not see the material difference to Pepsi and Coca Cola, which arguably are some of the strongest brands in the world. My comment regarding "exploding" is about the growing popularity of flavored and energy drinks with the younger generation (
@@andreinedelcu5330 Coke, for example, has 21 billion-dollar or more brands in their portfolio. Trying to compare Celsius to Coke is apples to oranges. Yes, energy drinks happen to be the popular drinks du jour. There is no moat. Winners change based on the whims of the fickle customers marketing people peddle them to. Again, there are no moats in this business. There are no switching costs. Celsius is spending A LOT more than comparable companies pushing these drinks so it's no surprise they should see sales growth. We'll see if that persists when they stop spending so much on marketing. Customers are fickle. The entire history of energy drinks shows that. There's nothing magical about expensive flavored water with 7 vitamins.