Insights

Celsius Holdings Stock Pops on PepsiCo Acquisition Speculation

What happened

Shares of beverage company Celsius Holdings (NASDAQ: CELH) were up 11% as of 2:40 p.m. ET on Thursday after Stifel analyst Mark Astrachan suggested that industry giant PepsiCo (NASDAQ: PEP) could move to acquire the company, according to The Fly. For its part, Pepsi stock was little changed on the news, up just 1%.

So what

Barriers to entry in the beverage space are relatively low, allowing many newcomers to enter the space. However, the big players like Pepsi and The Coca-Cola Company do have a competitive advantage when it comes to distribution. Smaller players often have to sign distribution agreements with the bigger players, which was the case for an energy-drink player that’s been gaining market share: Bang. 

Bang had signed a distribution deal with Pepsi. But yesterday, Bang management announced it’s officially moving away from Pepsi as a distribution partner. For Stifel’s Astrachan, this means Pepsi might move to fill the void with a more direct competitor to Bang’s products. And that’s where Celsius Holdings comes in. For Astrachan, Pepsi could greatly increase Celsius’ distribution.

Now what

For Celsius shareholders, today’s news is about as speculative as it comes and really isn’t actionable. Astrachan acknowledged that they had “no knowledge of talks.” Therefore, I doubt they anticipated the market’s reaction to the idea. 

However, it is true that Pepsi could be an ideal acquirer or partner for Celsius. The little beverage company has grown tremendously in recent years in large part due to increased distribution, which Pepsi could increase further. Moreover, Celsius’ customer base has proved loyal to the brand in recent years. And that loyal customer following could indeed make it a valuable acquisition target even if it’s still a speculative proposition at this point.

Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Celsius Holdings, Inc. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here To Get Started
FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here For More Info