Can Celsius' Shares Steer Clear of Crocs' Previous Blunder?
Celsius Holdings' stock ignited on Friday, soaring 33% at the opening bell, following impressive fourth-quarter earnings and a promising acquisition. Alani Nu, a fellow lifestyle brand focusing on functional energy drinks, protein shakes, and supplements, will join forces with Celsius in a $1.8 billion cash and stock deal. Investors are eager to see if this acquisition will revitalize Celsius' growth, avoiding a repeat of Crocs' acquisition of Heydude three years ago.
The Growth Slump and the Need for Change
Celsius was once the darling of growth investors, boasting triple-digit growth for three consecutive years. However, the tide turned in 2024, resulting in two quarters of declining revenue. Waning market interest and a falling stock price didn't sway value investors either. Celsius needed a change – and that's exactly what it's getting with the acquisition of Alani Nutrition and its popular brand, Alani Nu.
Alani Nu has made a significant impact on the market. Its flagship beverage line alone saw a 78% sales surge last month, as reported by circana, a third-party retail sell-through tracking company. Celsius is set to pay $1.275 billion in cash, another $25 million based on 2025 performance, and issue $500 million in new shares to Alani Nu stakeholders. However, after considering a $150 million tax asset, the net price comes down to an honest $1.65 billion – a reasonable investment based on Alani Nu's sales and EBITDA.
Alani Nu: Beyond the Beverage Can
Alani Nu's presence goes beyond functional energy drinks. The brand caters to a predominantly female audience, expanding its reach into protein shakes, dietary supplements, and snacks. This diversified portfolio has contributed to its rapid growth in popularity. The acquisition will not only give Celsius a new growth vehicle but also enable the company to tap into different markets and product lines.
Crocs and Heydude: A Cautionary Tale
Acquisitions aiming to boost growth aren't always successful. Crocs' acquisition of Heydude three years ago, for instance, failed to meet expectations. Despite the initial excitement, Heydude's sales faltered, causing Crocs' stock to plummet. Celsius will need to be mindful of this history and ensure that the Alani Nu acquisition brings lasting benefits.
A Step in the Right Direction for Celsius
Celsius' latest quarterly earnings report showed a 4% decrease in revenue, an improvement over the 31% year-over-year decline in the third quarter. The company's international sales growth remains strong, setting the stage for a promising future. The influx of Alani Nu's revenue and potential operating efficiencies could help Celsius accelerate its growth, if things play out as hoped.
In conclusion, Celsius Holdings' acquisition of Alani Nu has the potential to strategically propel both companies forward. The market response has been positive, and the financial terms seem reasonable. However, a cautionary eye towards Crocs' acquisition of Heydude serves as a reminder that such endeavors can carry risks, and Celsius will need to navigate these carefully to achieve sustainable growth.
Celsius investors hoping for a revitalization of the company's growth might find solace in the acquisition of Alani Nu, given its flagship beverage line's 78% sales surge last month. To finance this acquisition, Celsius is investing $1.275 billion in cash, another $25 million based on 2025 performance, and issuing $500 million in new shares to Alani Nu stakeholders. However, with a $150 million tax asset, the net price comes down to $1.65 billion.
The acquisition of Alani Nu is an opportunity for Celsius to tap into different markets and product lines, as Alani Nu's portfolio includes protein shakes, dietary supplements, and snacks, in addition to functional energy drinks. This diversified portfolio has contributed to Alani Nu's rapid growth in popularity among a predominantly female audience.
Aligning with this acquisition, Celsius' latest quarterly earnings report showed a 4% decrease in revenue, an improvement over the 31% year-over-year decline in the third quarter. This suggests that the company is moving in the right direction, and the influx of Alani Nu's revenue and potential operating efficiencies could accelerate Celsius' growth further, if all goes according to plan.
