Wednesday, August 9, 2017

August 9th - Research Notes & Trade Blog



Celsius Holdings, Inc. (CELH) Reports Record Second Quarter Financial Results.....Surprise, Surprise, Surprise.....Mea Culpa, 
Mea Culpa, Mea Culpa


This is not a recommendation, or a solicitation to purchase or sell shares of Celsius Holdings, Inc. ($CELH).  Be sure to read our complete disclaimer at www.altitradepartners.com. The opinions expressed herein are those of Altitrade Partners, and its principals, and should not be used as the basis for any decision to buy or sell securities. All investing involves risk. Do not rely solely on the opinions of others in making investment decisions. Please perform your own due diligence and invest responsibly. Altitrade Partners makes this blog available for informational purposes only. You should not follow our trading & investment strategies, as they are subject to change without notice.

Tuesday, August 8, 2017

August 8th - Research Notes & Trade Blog



Celsius Holdings, Inc. (CELH) Reports Financial Results For Q2 After The Market Close Tomorrow. Why We Don't Expect An Upside Surprise

Celsius Holdings, Inc. (CELH) will report financial results for the second quarter of FY 2017 after the close of the market tomorrow. 

After showing relatively flat revenue growth, on a sequential basis, for the last four consecutive quarters, we don't expect to see a sudden dramatic jump in revenue numbers with the release of the latest report.


In fact, our expectation is for revenues in Q2 to be somewhere in the vicinity of between $7.3 and $7.6 million along with a net loss for the quarter in excess of $3 million.

Those projections, if proven accurate, will probably do very little to instill investor confidence in the shares of CELH, which have already shown signs of weakness ahead of tomorrow's report.


After reaching a new all-time high of $4.78 on June 21st, shares of Celsius Holdings, Inc. have slowly been declining to a level in the mid-$3 range; still well above the intrinsic price found among most CELH valuation models.

The company has been battling a number of challenges over the past year, not the least of which has been trying to break out of a reported revenue range of between $6.0 and $6.7 million.

In addition, there has been no news regarding the naming of a successor CEO to replace Gerry David, who retired over six months ago.

To go without a full-time CEO for such an extended period of time should raise eyebrows among investors, since it calls into question whether or not the company is progressing as it should without someone at the helm full-time.

It also should be remembered that once a new CEO is named there will be a period of acclamation, as the internal culture adjusts to new company leadership. 

Also, as with any change in the C-suite, there will also likely be a "learning curve" that any newly-installed CEO must go through. 

The company will need to recapture the former days of heady revenue growth in order to justify a price-to-sales ratio that is currently well above the peer group in which CELH competes.

Most independent research services such as S&P Global (now CFRA) and Capital Cube have negative commentary on CELH. In fact, CFRA has a STRONG SELL on the shares.



Without a surprise revenue number above the $8 million level, we don't see how CELH will be able to maintain a share price at current levels. 

The entry into Hong Kong and China, while good news, will take time (perhaps 2-3 quarters) to impact both the top line and bottom line results.

In the meantime, the question remains just how long investors are willing to wait to see significant improvement in revenues and, more importantly, getting the company to being profitable.

With SG&A expenses likely to remain high for the foreseeable future, that proverbial "brass ring" of attaining profitability may be pushed out to perhaps sometime in mid to late 2018.

Gerry David, successfully got Celsius Holdings, Inc. out of a bad situation and breathed new life into this struggling little beverage company. 

His successor will bear the responsibility of carrying the torch to bring CELH to the next level of growth and development.

That is, of course, if there is someone out there willing to take on that challenge.

This is not a recommendation, or a solicitation to purchase or sell shares of Celsius Holdings, Inc. ($CELH).  Be sure to read our complete disclaimer at www.altitradepartners.com. The opinions expressed herein are those of Altitrade Partners, and its principals, and should not be used as the basis for any decision to buy or sell securities. All investing involves risk. Do not rely solely on the opinions of others in making investment decisions. Please perform your own due diligence and invest responsibly. Altitrade Partners makes this blog available for informational purposes only. You should not follow our trading & investment strategies, as they are subject to change without notice.

Monday, July 31, 2017

July 31st - Research Notes & Trade Blog



Celsius Holdings, Inc. Announces Distribution Agreement For Entry Into China Market.

Today Celsius Holdings, Inc. (CELH) announced that the company had signed a distribution agreement with Qifeng Food (Beijing) to distribute Celsius healthy energy drinks throughout China.



The long-awaited news sparked buying interest among investors, although we would have thought that more than a paltry 54,784 shares would have changed hands on such unexpected news.

We would categorize the news as unexpected, since during the past two investor conference calls CELH management has side-stepped questions about expansion into the China marketplace, leading some investors to question whether past references to the China story by previous members of CELH management could be relied upon.

While clearly a "feather in the cap" for CELH, we would caution investors to be very careful about ignoring the more important news which should be coming within the next few weeks; Q2 financial results.

The past four quarters CELH revenues have been stagnant, and the once high-flying CAGR has dwindled to a fraction of what it once used to be.

In fact, we wonder if the timing of today's announcement was purposeful in that it comes shortly before second quarter results are made public. 

If, as some think, Q2 numbers will fail to impress, at least the news of expansion in China will act as a buffer or distraction to such a disappointment.

The biggest reason why CELH has enjoyed a premium valuation over other small beverage companies was their revenue growth trajectory. 



For years the company experienced extremely strong compound annual growth rates for revenues (see below).

That is no longer the case. The last four quarters have shown the following:

Q2 2016 - $6.2 million
Q3 2016 - $6.7 million
Q4 2016 - $6.3 million
Q1 2017 - $6.0 million
Q2 2017 - ???

Unless they can shown a return to the prior strong growth levels in revenues, we think that the stock will reflect the new reality of slowing (and even declining) revenue growth going forward.

The fact that the company's shares now trade on NASDAQ also means that their financial results are being scrutinized by a lot more investment professionals than in the past.

Analysts will be quick to pick up on the slowing revenue growth, and develop an opinion based on what they see. The days of the share price being ruled by amateur opinions are over. 


As an example, consider the following history in a reserach report published by Canadean a few years ago:

"A recent report published by Canadean shows that Celsius' revenues grew at a compound annual growth rate of 15.97% from 2009-2013, and 38.12% in 2012 over 2011 numbers. The company's 2013 revenues saw a year-over-year increase of another 38% from 2012 results. We expect 2014 revenues to exceed those posted in 2013 by over 40%. There aren't many beverage companies that can say that they've experienced organic growth at those kinds of levels. If anything, growth levels have stagnated in the beverage business, as evidenced by the slowdown many large beverage brands are experiencing.

It is interesting to point out that the most recent data from IRI's mid-June 2014 report shows that Celsius was in the top quintile, ranked 112 out of 599 brands in its peer group, consisting of the Energy, RTD Coffee Tea, Waters, Isotonic, Functional, Water and Coconut Water categories. It was also noted in that same report that of the top 125 brands, 59 (47%) are declining in sales, while Celsius continues to show meaningful growth.

We expect Celsius Holdings, Inc. to once again report record sales for FY 2014. Our internal projection is for total revenues to come in at between 14-15 million US DOLLARS . That would give the company a YOY increase of 45% at the median level of 14.5 million US DOLLARS . Suffice to say that the Celsius brand continues to experience solid revenue gains, and increasing market share at a time when other brands are struggling to keep market share, let alone grow their revenues." 


http://www.dailymotion.com/video/x2oep3r


In FY 2016 annual revenues for Celsius Holdings, Inc. came it at $22.8 million, an increase of 33% from FY 2015 levels of $17.2 million.

In order to match last years growth rate in revenues, the company would have to show FY 2017 sales of $30.3 million.

To get back to the heady days when CAGR approximated 38%, revenues would have to reach $31.5 million in FY 2017.

Given that Q1 revenues were $6.0 million, it would take an additional $25.5 million in revenues in the remaining three quarters of FY 2017 to get there. That's an average of $8.5 million per quarter.

It's easy to extrapolate numbers, based on wishful thinking and high hopes. It's another thing to achieve them in a very competitive global beverage environment.

We're not saying that it cannot be done, but we believe that it would be a difficult task given the fact that the company is still without a full-time CEO and it will most likely take at least 2-3 quarters to achieve significant sell-through and become a newly-established brand in the Asian markets.

However, for at least now, investors can bask in the glow of today's news, and hope that the upcoming Q2 results are able to break the revenue stagnation of the past year.

This is not a recommendation, or a solicitation to purchase or sell shares of Celsius Holdings, Inc. ($CELH).  Be sure to read our complete disclaimer at www.altitradepartners.com. The opinions expressed herein are those of Altitrade Partners, and its principals, and should not be used as the basis for any decision to buy or sell securities. All investing involves risk. Do not rely solely on the opinions of others in making investment decisions. Please perform your own due diligence and invest responsibly. Altitrade Partners makes this blog available for informational purposes only. You should not follow our trading & investment strategies, as they are subject to change without notice.

Friday, July 28, 2017

July 28th - Research Notes & Trade Blog



Update: It's Been Almost Five Months Since Gerry David's Departure From Celsius Holdings, Inc. 

It was back on Februray 24, 2017 that it was announced that CEO Gerry David would be leaving Celsius Holdings, Inc. (CELH) after an almost 5 1/2 year stint in which he successfully managed to turn the struggling beverage company around.

The departure of Gerry David, effective as of March 1, 2017, left a tremendous void in the management structure of CELH.



John Fieldly, CFO, was named to the position of interim CEO until the Celsius Board of Directors could find a suitable replacement for Mr. David.

That was almost 5 months ago, and there has still been no announcement regarding who is to going to provide the much needed leadership to shepherd the company moving forward. 

This company is at a critical juncture in its lifespan, as plans to move forward with International expansion into the Asian markets was front and center in investor's minds to provide the next source of revenue growth.

While we are sure that the Celsius Board of Directors is being very deliberate in making the proper choice for future company leadership, we question why they have been unable to find a qualified candidate after such a inordinate amount of time?

This is not a recommendation, or a solicitation to purchase or sell shares of Celsius Holdings, Inc. ($CELH).  Be sure to read our complete disclaimer at www.altitradepartners.com. The opinions expressed herein are those of Altitrade Partners, and its principals, and should not be used as the basis for any decision to buy or sell securities. All investing involves risk. Do not rely solely on the opinions of others in making investment decisions. Please perform your own due diligence and invest responsibly. Altitrade Partners makes this blog available for informational purposes only. You should not follow our trading & investment strategies, as they are subject to change without notice.


Monday, July 24, 2017

July 24th - Research Notes & Trade Blog



Celsius Holdings, Inc. (CELH) is Approaching a Key Technical Level. 
Will It Hold?

Earlier today, we pointed out that CELH was approaching its 200-day moving average, which coincidentally has provided an area of meaningful support in the past.


At the time the stock was trading at around the $3.85 level. 

As the day wore on, the stock continued lower, until in the last few minutes additional selling caused the shares of CELH to close at $3.62; the low of the day.


While volume was above average, we saw no signs that the stock was being aggressively sold down.

It seems that investors are somewhat nervous about the upcoming financial results for the second quarter of 2017, which are expected to be released, by the company, within the next three weeks.

It is our opinion that they have good reason to be.


Quarterly revenues for Celsius Holdings, Inc. have shown a stagnant pattern for the last four quarters, culminating in a sequential decline over the most two recent quarters.

We believe that unless the company can show blockbuster second quarter results, it will lead to frustration on the part of investors who have seen the growth story of the past wane recently.

Given that the price-to-sales valuation metrics for CELH are already much higher than the peer group in which they compete, we doubt that investors will be willing to continue to assign an above-market valuation to the shares without seeing a resumption of strong revenue growth.

The internal bogey which we have set for the company to show that the growth story is not over (at least temporarily) is a Q2 revenue number of $8 million.

Anything less than that, in our opinion, will be met with ambivalence from investors.

While a number in the low to mid $7 million range, would get them out of the doldrums of the $6's, it just wouldn't be enough to excite us.

We would also view a number in the 7's as a shortfall towards being able to significantly beat last year's annual revenue number of $22.8 million.

While some may argue that the company is on the cusp of generating strong International sales, by virtue of their plans to enter the Asian markets, we would caution that such optimistic forecasts fail to take into consideration the complexities of such an undertaking, and the ramp-up time to create the necessary awareness for a new product to sustain and grow market share.

We don't expect to see a meaningful impact to International revenue numbers for at least 2-3 quarters, as the sell-through of product begins to take hold. That sell-through will be critical to the company's success overseas.

We will be watching very closely to see the upcoming financial results, and if the company provides any future guidance; something that they have been very reluctant to do during the past few investor conference calls following the release of the quarterly numbers. 

We cannot think of a more important quarter for Celsius Holdings, Inc. and its shareholders. 

If the price action over the past few months is any indication of what the market is expecting, the ride may get rougher over the next few weeks before investors can measure the recent progress and assess the future prospects for revenue growth in a more objective and meaningful way.

This is not a recommendation, or a solicitation to purchase or sell shares of Celsius Holdings, Inc. ($CELH).  Be sure to read our complete disclaimer at www.altitradepartners.com. The opinions expressed herein are those of Altitrade Partners, and its principals, and should not be used as the basis for any decision to buy or sell securities. All investing involves risk. Do not rely solely on the opinions of others in making investment decisions. Please perform your own due diligence and invest responsibly. Altitrade Partners makes this blog available for informational purposes only. You should not follow our trading & investment strategies, as they are subject to change without notice.

Tuesday, July 18, 2017

July 18th - Research Notes & Trade Blog



The Technical Picture For $CELH Continues To Deteriorate


$CELH has broken down from a technical viewpoint. Expect to possibly see mid-3's before finding new support.

This is not a recommendation, or a solicitation to purchase or sell shares of Celsius Holdings, Inc. ($CELH).  Be sure to read our complete disclaimer at www.altitradepartners.com. The opinions expressed herein are those of Altitrade Partners, and its principals, and should not be used as the basis for any decision to buy or sell securities. All investing involves risk. Do not rely solely on the opinions of others in making investment decisions. Please perform your own due diligence and invest responsibly. Altitrade Partners makes this blog available for informational purposes only. You should not follow our trading & investment strategies, as they are subject to change without notice.


Thursday, July 13, 2017

July 13th - Research Notes & Trade Blog


A Breach Of The 50-day Moving Average Points To Possible Further Technical Damage For $CELH




This is not a recommendation, or a solicitation to purchase or sell shares of Celsius Holdings, Inc. ($CELH).  Be sure to read our complete disclaimer at www.altitradepartners.com. The opinions expressed herein are those of Altitrade Partners, and its principals, and should not be used as the basis for any decision to buy or sell securities. All investing involves risk. Do not rely solely on the opinions of others in making investment decisions. Please perform your own due diligence and invest responsibly. Altitrade Partners makes this blog available for informational purposes only. You should not follow our trading & investment strategies, as they are subject to change without notice.