Celsius Stock Jumps on Earnings Beat. The Alani Nu Deal Is Paying Off.

Celsius energy drinks. (David Paul Morris/Bloomberg)

Celsius stock soared as much as 20% on Thursday after the energy drink maker’s quarterly sales far surpassed analysts’ expectations.

Total revenue jumped 84% from a year ago to a record $739.3 million in the second quarter, exceeding the $652.4 million analysts had expected. Diluted earnings came at 33 cents per share for the three months ended in June, up from 28 cents a year ago and beating estimates for 21 cents.

The growth was largely driven by the recently acquired female-focused energy-drink brand Alani Nu, whose retail sales surged 129% year over year to $301.2 million. This marks one of the fastest accelerations in the category and underscores the brand’s resonance with younger, more diverse consumers, said the firm.

Revenue for the namesake Celsius energy drinks also increased 9% from a year ago—after posting a year-over-year decline for three quarters in a row—thanks to more distribution points and faster selling speeds. The numbers reflected “increasing consumer demand for sugar free, functional beverages,” said the company.

“In an earnings season full of disappointments, these results stand out and we expect the momentum to continue through the remainder of the year,” wrote Truist analyst Bill Chappell in a Thursday note.

Celsius has a 17.3% share in the U.S. ready-to-drink energy category—the Celsius brand has 11%, while Alani Nu makes up 6.3%. While Celsius’ market share has shrunk 1.3 percentage points from a year ago, Alani Nu has advanced 3.1 points.

“As momentum builds across the energy category, our brands continue to lead—driving household penetration, expanding shelf space and outperforming expectations,” said Celsius CEO John Fieldly in a statement.

BNP Paribas analyst Kevin Grundy wrote on Thursday that while he had largely expected the blowout growth from Alani Nu, the analyst was surprised by the “encouraging return to growth for the core Celsius brand.”

Celsius shares soared in the first half of 2024 on the back of exponential growth. Thanks to the energy drink maker’s successful social media strategy, and brand image of healthy products, Celsius has quickly taken market share from major rivals like Red Bull and Monster Beverage.

But the stock has slumped since last May after PepsiCo, Celsius’ major distributor in the U.S., reduced orders as the beverage and snack giant cut the amount of inventory it holds. This has hurt Celsius’ financial results.

Barron’s wrote last September that the jitters look overblown and the stock is set to bounce back to a higher valuation. The stock was $32 back then. On Thursday, shares are trading around $50.

Celsius stock’s surging price on Thursday “represents a case of The Street having underestimated the positive earnings impact of the purchase of the female-focused energy drink brand,” wrote Garrett Nelson, senior equity analyst at CFRA Research, referring to Alani Nu.

She says Celsius stock’s above-average short interest—meaning the large percentage of investors betting against the stock—has also likely contributed to the gains. When shares prices go up, short sellers often buy back the stock at a higher price than they sold it for to avoid further losses, which could in turn drive prices even higher.

Write to Evie Liu at evie.liu@barrons.com