Energy drink stock Celsius pops more than 25% on big quarterly results, Alani Nu acquisition

Celsius Holdings surged on Friday as investors appeared reassured by the company's potential growth prospects, given its record full-year revenue results and its latest acquisition of a rival energy drink brand.

Shares of the once-high-flying beverage maker popped more than 25% in Friday trading.

Celsius' fourth-quarter revenue came in at a record of $332.2 million, higher than the $326 million in revenue expected from analysts polled by LSEG. Adjusted earnings of 14 cents per share also topped analysts' forecast for 11 cents, per LSEG.

The company also said its agreed to acquire Alani Nutrition, maker of the female-focused Alani Nu drinks popular with social media influencers, for $1.65 billion in a deal combining both cash and stock.

"The transaction will combine two growing, scaled brands in the U.S. energy drink category, creating a leading better-for-you, functional lifestyle platform that is well positioned to capitalize on the growing consumer preference for zero-sugar alternatives," the company said in the press release.

Celsius, 1 year

A so-called short squeeze where investors who sold the stock short are forced to cover their bets may be helping fuel the pop. Celsius was a heavily shorted name, with 22% of its shares available for trading sold short, according to FactSet.

The stock is significantly off its 2024 highs as Celsius has struggled with its expansion, after it previously rapidly scaled to compete with the market share of its larger competitors, Red Bull and Monster Beverage.

Its shares were down more than 58% over the last 12 months before Friday's move.

Analysts noted that between Celsius and Alani, the combined brands will attract greater share of female energy drink consumers, but that the decline in Celsius' sales growth over the past year remains remains a stock overhang. Truist analyst Bill Chappell pointed out that Pepsi's distribution of Celsius and Anheuser-Busch InBev's continued distribution of Alani in the near term will lead both names to compete for shelf space and market share.

"We believe the brands target the same audience so faster growth for Alani Nu could result in slower growth for CELH in the next few quarters," Truist analyst Bill Chappell said in a Thursday note to clients.

Morgan Stanley analyst Eric Serotta said that the acquisition could turn Celsius into a 'story stock' again for the next several quarters, but that he remains more cautious over the medium-term given continued weak retail sales for Celsius and the consumer overlap between Celsius and Alani.

There's risk the deal was "done from a more defensive posture," he said in a Friday note.