Why We Don’t Trust Celsius Holdings Inc. (Nasdaq: CELH) Portrayed Growth
Grizzly Research, 09 October 2020
Celsius Holdings Inc. is a ﬁtness beverage company that has seen its stock skyrocket in 2020 on the back of sudden and unexpected revenue growth.
Investors have been led on by strong sales trends driving sky-high expectations for the future, though our analysis shows Europe, a substantial portion of the business, is not nearly as good as it looks, with far lower and potentially negative sequential growth across Q3-2019 to Q2-2020.
We ﬁnd Celsius’ acquisition of their Nordic distributor Func Foods concerning, and urge investors to question why management would commit resources to a non-core business approaching insolvency with a poor track record of successfully growing brands, serving a geography with declining sales.
Our search for a rationale revealed what appears to us to be several troublesome factors indicating Func may have been used for sales manipulation and/or channel stuﬃng. We highlight rising payables, beneﬁcial distribution terms, and strong hints at Multi-Level-Marketing Activities.
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Problems at Celsius Holdings (CELH)
Edwin Dorsey, 01 October 2020
Celsius Holdings (NASDAQ: CELH — $1.63 billion) is a company like no other. The company allegedly makes healthy energy drinks and its stock is up nearly 900% in the last five years. Its investors include indicted bankers involved in 1MDB, hip-hop producer Russell Simmons, and a shark from Shark Tank. The company uses an auditor not used by any other NYSE or NASDAQ listed company and has told the SEC it does “not expect that our disclosure controls or internal controls will prevent all error and all fraud.”
Celsius is in the business of development, marketing, sale and distribution of healthy fitness drinks under the Celsius brand name. The company, based in Boca Raton, Florida, is valued at roughly 16x its trailing twelve month sales of approximately $100 million. Part of the reason for this rich valuation has been incredible revenue growth. For its most recent quarter, Q2 2020, Celsius’s revenue grew 86% compared to Q2 2019. A major contributor to this growth was European revenue, which in Q2 2020 was approximately $8.8 million, up 595% from Q2 2019 revenue of $1.3 million.
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