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$CELH short interest up 16% from last report.
The shorts are selling into the hype. Besides, everyone knows that shorts are known for finding companies like vultures find carcasses. They tend to be much smarter than longs.
We wouldn't want to own shares of CELH going into the Q2 financial results. We probably won't see any meaningful covering until around $1.50.
http://shortsqueeze.com/?symbol=CELH&submit=Short+Quote%99
If you are using the current 38.8 million shares outstanding that would sound about right.
We are basing that metric on the number of fully-diluted shares, currently around 51.8 million. We feel that is a more appropriate number, since it accounts for all the stock option grants, convertible debt, and other future dilutive measures, etc.
While no one can know for certain what the intrinsic value of a stock is, you can get a good sense of whether a company is overvalued or undervalued by comparing it against other companies in their industry.
The average Price-to-Sales ratio in the beverage industry is about 4X. Celsius is selling at around 10X, with a 1.3% sequential revenue growth number and YOY revenue growth of around 20%.
That's not a reasonable valuation for a company of CELH's size, growth rate and annual revenue base. Sorry, but it's still overvalued and will likely come back to a more reasonable valuation which we put at well below $2.00 a share.
http://altitradepartners.blogspot.com/2015/05/may-20th-research-notes-trade-blog.html
Many people "missed the train" by not getting out after a better than 600% rise in price.
Was the move from 0.50 cents on 12/31/2014 to $3.55 on 4/28/2015 overdone?
We think so.
Celsius may have a potential problem with their "Clean Energy" tag line.
It's actually been being used by another company for awhile.
http://runa.org/clean-energy-drinks/
RUT-ROH
Thanks for helping to make our point.
There are no large volume sellers because they have bought into the Hype & Hope investment strategy.
It's how stockholders become stuckholders.
New buyers of CELH at these prices are relying on the Hype & Hope investment strategy.
<<"But moot since the only ones buying large stakes are valuing it between $15 million and $40 million">>.
So much for the serious discussion a few of us hoped to have regarding CELH.
Have a good weekend everyone !!!
Our facts are correct:
From the New York Times article; the link which we included in our post.
<<"Glaceau is based in Whitestone, Queens. Last year, an Indian tea company, Tata Tea, bought a 30 percent in Energy Brands for $677 million. At that time, a Tata executive told Dow Jones that Glaceau’s revenue for the year would be $355 million and would jump to $700 million in 2007.">>
The announcement of the acquisition was May 26, 2007. You're looking at the 2006 revenues.
Do you really believe that Coca-Cola would pay $500 million for Celsius today? That's 33x revenues!
C'mon, get serious.
We wouldn't even attempt to compare this to the Vitamin Water valuation for two reasons:
1. Coca-Cola executives have admitted that they overpaid for that acquisition by a considerable amount. In fact, they won't even discuss what they were thinking (probably because they weren't!)
"Finally, Winters brings his case to the feet of CEO Kent, accusing him of throwing billions of dollars away on two expensive acquisitions. The first was Coca-Cola Enterprises' North American bottling business for $12.2 billion. Winters said management had said at the time of the purchase that the company would fix up the business and sell it off to bottling partners, though results seem to have disappointed. Winters also criticized Coke for its $4.1 billion acquisition of Glaceau, the maker of VitaminWater, in 2007, noting that there has been little production innovation and competition is increased in the enhanced water segment."
http://www.usatoday.com/story/money/markets/2014/12/28/why-this-fund-manager-thinks-coca-cola-has-lost-its-way/20872981/
Coke executives even went so far as to ask people to stop using the Vitamin Water acquisition as the benchmark comparison for small-beverage company valuations. It seems that just about everyone wants to point to Vitamin Water when they want to determine the value of their company as an acquisition. It's a great way to get laughed out of a Boardroom.
2. You're attempting to compare Celsius with $15 million in annual revenues with Vitamin Water's $700 million in revenues at the time Coke acquired them?
http://www.nytimes.com/2007/05/26/business/26drink-web.html?_r=1&
We find that comparison to be quite a stretch, and one that almost borders on the ridiculous.
Raider, we hope that this is not a reference to anything that you attribute to us. If it is, please provide a link or something to substantiate your allegations.
<<If one thinks this company is terrible and making bad decisions and the stock is going to zero, I have to question why that person would devote so much time and energy to making daily comments while holding no position (long or short).>>
There is nothing that we would like more than a serious discussion about CELH.
Thanks for your contributions to the board. We look forward to hearing more of your thoughts and opinions.
The conspiracy theorists are out again on Yahoo's $CELH stock message boards. Some of these guys have quite an imagination.
And, of course, they always have to play that SEC card.
Just too funny!
We have to admit, we are at a total loss to explain the CDS convertible note arrangement.
It just defies our business sensibility and all financial logic.
Kezzek, that $14.5 million evaporated faster than a fart in a fan factory.
We wouldn't compare this new management team with the prior one. We've spent a great deal of time with them over the past three years. We have to say that we are impressed with their knowledge and accomplishments.
The turnaround that Gerry David has engineered, since he became the CEO, has been nothing short of amazing.
http://www.retailingtoday.com/article/saving-celsius-cpg-company-comes-back-brink
We like the company. We like the products. We just don't like the stock at this valuation.
<<They had a Walmart deal, they just sold $14.5 million worth of stock to investors at $5.32/share.>>
There's nothing quite like twisting our words around.
<<Now those articles are about MAC-D any why the company is on the verge of collapse.>>
We wrote a few articles from a technical analysis perspective because we feel that it is important. Most our our work is about macro-fundamentals of the beverage industry and CELH in particular. We have never, ever, come close to saying that the company is on the verge of collapse.
<<Technical analysis and to a secondary degree fundamental analysis (balance sheet/income statement/cash flow are always worth looking at) on a company like this is laughable.>>
While we understand your view on T/A, to say that fundamental analysis on a company like this is laughable borders on the absurd. Fundamentals, i.e., balance sheet/income statement/cash flow ARE ALWAYS IMPORTANT.
Without that data you have nothing to work from to know how to value a company. It's just plain irresponsible for any investor to infer that.
<<MACD, China slowdowns, debating the semantics of a music moguls words in an interview are all interesting, but really pretty meaningless in the big picture.>>
Violating the guidelines set forth by the NAD by saying that "you lose 100 calories just by drinking it" is not semantics. It's misrepresentation and borders on fraud and malfeasance. It will be interesting to see just how meaningless, in the big picture, this issue becomes.
China & Brazil were considered big drivers for international expansion, so to ignore the economic problems taking place in those countries is a mistake in our opinion.
Really? A 30% drop in 3 weeks?
Most people would call that a "Crash".
Date Change % Change Close
October 28, 1929 -38.33 -12.82 260.64
October 29, 1929 -30.57 -11.73 230.07
https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
The comparison wasn't so much between the markets themselves, but the inability of the government to stop the inevitable trend of prices from falling further.
The only reason there is not more selling is that the Chinese government has now made it illegal to sell stocks, and more than half of Chinese companies have pulled their shares from the market.
We would hardly call no volume a good sign for CELH.
Government manipulation of markets is never a good thing, and it will only provide temporary support.
The U.S. tried this during the Crash of 1929, albeit unsuccessfully.
You may get a dead-cat bounce for a few days, but the psychology among investors has changed in China.
The Chinese stock market is now broken.
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/07/20150706_macrochina.jpg
http://video.foxbusiness.com/v/4345907393001/mohamed-a-el-erian-dont-think-china-is-investable/?playlist_id=3166411554001#sp=show-clips
The timing for CELH to enter China could not be worse.
Kezzek, you make some good points.
The closer we examined the terms of the financing deal, the more disappointed we were. The net proceeds to the company were only $11.5 million out of the $15.95 million investment supplied by Russell Simmons, Et al.
That's not a whole lot of capital to be working with to penetrate the international markets; especially China. There are production costs, inventory management, product design and labeling costs, import taxes, tariffs, local fees, etc. That is in addition to marketing and advertising costs.
They, most likely, will still have access to other things like LOC and other debt arrangements, but it appears that the equity base has gotten the short end of the stick.
We assume that distribution costs in China will be lower by virtue of where product placement will initially take place.
A production run for all of Li Ka-Shing's 11,000 stores in China could require a good portion of that $11.5 million. Then you would have to see the required "sell-through", or face a similar situation to what occurred back in 2009-2010 under Steve Haley.
We expect that a large portion of these costs will be incurred up-front, and will have to be accounted for in Q2. This is the main reason why we don't see a third straight quarter of profitability for the company.
We believe that additional dilution will eventually take place, but not in the immediate future.
We would have to disagree on a couple of points.
Sales momentum is slowing. A 20% YOY revenue growth from Q1 2014 to Q1 2015 is well below previous gains recorded.
A sequential increase of just 1.3% quarter to quarter leads us to believe that sales are stalling, or, at best, peaking.
Sales in domestic markets showed negative comparisons in Q1 2015. That's a bad sign.
Given the fact that the average Price-to-Sales ratio in the beverage industry is approximately 4X, Celsius is selling at a huge 250% premium (fully-diluted).
It's very hard to justify that kind of multiple with the growth numbers cited above.
The fact that they just nearly doubled the shares outstanding from 20.5 million to 38.8 million, and did so at a huge discount, only adds to the concerns we have.
BTW, any profit that we projected for 2015, will now have to be spread over those additional shares. Kind of makes the numbers we are looking for more difficult to achieve.
We'll have to wait and see what the Q2 results come in at, but at this point we will probably have to take our internal numbers down (we at currently at $22- $25 million in revenues for FY 2015) unless they can come up with a way to work around the problems on the international front in two of the BRIC markets; China & Brazil.
While it's nice to paint a picture of a high-growth little micro-cap company with tons of future potential, the most recent numbers just don't seem to bear that out.
Is The Market For $CELH in China Disappearing?
http://tinyurl.com/na2nwx7
http://tinyurl.com/qbused7
Talking about listing on NASDAQ seems a bit premature
What are the listing requirements for the Nasdaq?
Major stock exchanges, like the Nasdaq, are exclusive clubs - their reputations rest on the companies they trade. As such, the Nasdaq won't allow just any company to be traded on its exchange. Only companies with a solid history and top-notch management behind them are considered.
The Nasdaq has three sets of listing requirements. Each company must meet at least one of the three requirement sets, as well as the main rules for all companies.
Listing Requirements for All Companies
Each company must have a minimum of 1,250,000 publicly-traded shares upon listing, excluding those held by officers, directors or any beneficial owners of more then 10% of the company. In addition, the regular bid price at time of listing must be $4, and there must be at least three market makers for the stock.
However, a company may qualify under a closing price alternative of $3 or $2 if the company meets varying reequirements. Each listing firm is also required to follow Nasdaq corporate governance rules 4350, 4351 and 4360. Companies must also have at least 450 round lot (100 shares) shareholders, 2,200 total shareholders, or 550 total shareholders with 1.1 million average trading volume over the past 12 months.
In addition to these requirements, companies must meet all of the criteria under at least one of the following standards.
Listing Standard No. 1
The company must have aggregate pre-tax earnings in the prior three years of at least $11 million, in the prior two years at least $2.2 million, and no one year in the prior three years can have a net loss.
Listing Standard No. 2
The company must have a minimum aggregate cash flow of at least $27.5 million for the past three fiscal years, with no negative cash flow in any of those three years. In addition, its average market capitalization over the prior 12 months must be at least $550 million, and revenues in the previous fiscal year must be $110 million, minimum.
Listing Standard No. 3
Companies can be removed from the cash flow requirement of Standard No. 2 if the average market capitalization over the past 12 months is at least $850 million, and revenues over the prior fiscal year are at least $90 million.
A company has three ways to get listed on the Nasdaq, depending on the underlying fundamentals of the company. If a company does not meet certain criteria, such as the operating income minimum, it has to make it up with larger minimum amounts in another area like revenue. This helps to improve the quality of companies listed on the exchange.
It doesn't end there. After a company gets listed on the market, it must maintain certain standards to continue trading. Failure to meet the specifications set out by the stock exchange will result in its delisting. Falling below the minimum required share price, or market capitalization, is one of the major factors triggering a delisting. Again, the exact details of delisting depend on the exchange.
(For further reading on the Nasdaq and other U.S. exchanges, see Getting to Know Stock Exchanges and The Tale Of Two Exchanges.)
http://www.investopedia.com/ask/answers/121.asp#ixzz3fEb2rMqO
This is not a sign of sustainable double-digit growth:
Domestic sales decreased 6% or $103 thousand primarily associated with increases in promotional allowances and timing in customer order patterns. As a result, domestic retail accounts decreased 7% and health and fitness accounts decreased 13%, which was offset by growth in internet sales of 5% from the same period in 2014, respectively.
http://celsius.com/celsius-holdings-inc-reports-record-first-quarter-revenue-and-second-consecutive-profitable-quarter/
This is another reason why the company is overvalued, based on diminishing growth prospects.
The company needs to make up for the stagnant growth in the U.S. with strong international growth in the coming quarters. That's going to take more time than many buying at today's prices seem to realize.
In the meantime, if the Q2 numbers come in similar to Q1, investors will punish the stock severely. Nothing makes investors lose confidence more than seeing a strong double-digit revenue trend disappear.
Sales have most likely not even started in China yet, so you missed the point of the blog.
The CELH management team had very high aspirations for the market in Brazil, as well as China, as the next big driver for international revenues.
All we are saying is that its going to be tough sledding in both of those markets given the current economic conditions.
911 was not an economic event like a stock market crash or a recession, so you are comparing apples & oranges. Also, we doubt that the U.S. economy would have even had a recovery from the housing bubble (if you want to call it a recovery) without The Fed's Zero Interest Rate Policy.
The Brazilians and Chinese don't have a "Helicopter Ben Bernanke" with a Bazooka to take the sting away. The Chinese real estate market is a shambles and we don't expect it to recover for decades. Now the stock market threatens to initiate a one-two punch on investors.
We're happy to wait for the Q2 results to see if Celsius has staying power, or not, but judging from the 1.3% sequential increase from Q4 2014 to Q1 2015, we wouldn't be placing any big bets on a blockbuster Q2 report.
Sorry, we just don't see it.
BTW, comparing Monster Beverage Co. with Celsius is really quite funny!
We were fine with the "negative-calorie" messaging for the Celsius brand, since the National Advertising Division of The Better Business Bureau looked at those claims and said that there was enough evidence to substantiate them for use in Celsius's marketing & advertising.
That has all changed in the past few months with Russell Simmons's public pronouncements that "you lose 100 calories just by drinking it".
http://altitradepartners.blogspot.com/2015/06/june-20th-research-notes-trade-blog.html
That is a far cry from the guidelines that the NAD laid out for making calorie-burning claims for Celsius products.
Here are a few exerpts taken directly from the NAD's official ruling:
Addressing NAD’s concern that the advertising for Celsius raises some of the same issues raised by the Enviga advertising claims controversy, where 26 attorneys general joined in an action to eliminate advertising claims for a Nestle/Coke drink product with similar ingredients, making calorie burning claims, the advertiser stated that, while it is true that both Celsius and Enviga contain two of the same ingredients, namely caffeine and green tea catechins, particularly the catechin epigallocatechin gallate (EGCG), it is also true that these two ingredients have been shown in clinical studies to increase metabolism and reduce body fat.
NAD noted that over the past few years, the manufacturers of other “calorie burning” drinks have come under attack. Notably, Enviga, a calorie burning beverage jointly sold and marketed by The Coca-Cola Company and Nestle was the subject of a lawsuit filed by 26 state attorney generals, alleging that “to the average reasonable consumer, in New Jersey and elsewhere in the United States, burning calories or reducing caloric consumption results in losing weight, or at least offsetting weight gained from other calories.” The action was settled, and as part of the settlement, the marketers agreed not to make claims that consumers who drink the product will “burn calories” simply by drinking it.
The last sentence indicates that the NAD would likely take issue with Mr. Simmon's public statements which clearly violate the aforementioned NAD guidelines.
The focus of much of the concern over energy drinks is sugar, in addition to the usual concerns over caffeine. It appears that it may be the combination of these two key ingredients that are at the forefront of the controversy.
We applaud the fact Celsius has steered clear of the sugar problem associated with most energy drinks, and has developed an alternative clean energy product.
The problem now is that almost every other energy drink company is developing their own version of "clean energy".
This new trend which has recently developed will likely be the focus of much of the marketing & advertising by the energy drink industry.
http://www.thegrocer.co.uk/reports/category-reports/energy-drinks-category-report-2015/520323.article
Whether, or not, Celsius will be able to compete with these mega-companies with billions of dollars in revenues and huge marketing & advertising budgets remains to be seen.
The net proceeds to the company from the recent capital raise were approximately $11.5 million out of the $15.95 million the new investor group put in.
That's hardly enough to mount any kind of competitive campaign against the giant beverage companies.
As a result, we expect further dilution of existing shareholders somewhere down the road.
This will be a very important trial for energy drink manufacturers like Celsius.
http://www.lawyersandsettlements.com/articles/monster-energy-drink-deaths-hospitalizations/monster-energy-drink-deaths-hospitalizations-21-20747.html#.VZh5CvlVhPM
With all of the previous settlements, it appears that Monster is unwilling to let a trial run its course in the courts.
The question is "What are they afraid of?"
For the very last time let us say.....
1. We like the company.
2. We like the products.
3. We don't like the stock based on its current valuation.
Don't make the mistake of lumping statement number three in with numbers one and two.
If the price came back to a reasonable level, consistent with our valuation model, we might be inclined to get back in.
There is no question that the company has made considerable progress over the past 3 1/2 years under the new management team.
Why that management team felt that they needed to basically give away the company to Russell Simmons and his partners is something which we continue to question.
Listening to Russell Simmons talk on the media circuit about how he "bought the company" makes it sound like he owns it lock, stock & barrel.
We sure hope that the people who built this company have not lost control of it. To that point, we question why Russell Simmons has been allowed to continue to spread a message about Celsius that is totally inaccurate, and borders on public deception.
Gerry David, the CEO of Celsius, needs to send a memo to Mr. Simmons that says: Russell, stop telling everyone that "you lose 100 calories just by drinking it."
Contrary to what people would like to believe, there is no magic bullet for weight loss. Mr. Simmons is doing a terrible disservice to consumers, investors and the company by his continued irresponsible actions in misrepresenting Celsius products and how they work.
Lastly, we would like to know why Carl DeSantis sold his note, convertible into equity, for $1.5 million, when those shares today are worth in excess of $12.5 million? That's a lot of money to leave on the table. We thought that Carl was smarter than that.
If anyone has any insights, please feel free to share them.
Happy 4th of July weekend, everyone !!!
The link that you posted does not work. Here is the correct link:
http://www.wsj.com/articles/kimora-lee-simmons-launches-a-new-fashion-brand-for-working-mothers-1435791342
What does this have to do with Celsius?
Down volume swamped up volume 4-to-1 today.
Only 63,802 shares in the green and 244,915 in the red.
Some big blocks were being sold at the bid all throughout the session. Somebody wants out in a hurry.
http://ih.advfn.com/stock-market/USOTC/CELH/trades?trade_set=recent
If it weren't for the Sherwin-Williams sisters and the Behr Brothers painting the tape at the end of the day it would have really looked ugly.
Short Sellers Appear to Have Strong Conviction
There was very little change in the overall numbers reported for June 15th.
http://www.otcmarkets.com/stock/CELH/short-sales
http://shortsqueeze.com/?symbol=CELH&submit=Short+Quote%99
$CELH goes from buy to sell on American Bulls website
"The market ran out of steam and the traders are now more in agreement about the bearishness. The evidence is strong enough to prompt the closing of long positions. The bearish pattern that was previously identified is finally confirmed and a SELL signal is generated. You still have time to follow the signal and then you may start checking other securities for a bullish bet."
This is a major bearish reversal pattern, which is even more significant than a regular Bearish Harami. The outline again looks like a pregnant woman, as with the Bearish Harami Pattern. However, now the baby is a Doji. Basically, the pattern is characterized by a white body followed by a Doji that is completely inside the range of the prior white body.
https://www.americanbulls.com/SignalPage.aspx?lang=en&Ticker=CELH
This is just another example of the misrepresentation being fostered on the public by Russell Simmons.
There were not seven (7) Universities that studied Celsius. There were actually only six (6) studies done by a single University; The University of Oklahoma.
It is interesting to note that the seventh study on Celsius was never published. We still don't know why.
As to Mr. Simmons contention that "you lose 100 calories just by drinking it", that's not spreading the love. That's spreading lies.
"Any advertising touting the calorie burning benefit of Celsius would necessarily have to include elements that disclose in close proximity to the calorie burning claims that to achieve any of the claimed benefits, individuals drinking Celsius would also have to exercise."
http://www.inc.com/russell-simmons/why-i-invested-16-mm-into-an-energy-drink.html
We are profiting from our short position.
No, not in $CELH. In the S&P 500.
https://www.facebook.com/photo.php?fbid=908688482503626
We do not have a short position in $CELH, and never have had one.
Sorry to disappoint so many of the conspiracy theorists, both here and on a few other stock message boards, who believe that we post on I-HUB in order to drive the price of $CELH lower, and thereby profit from an imaginary short position that we've put on.
We like the company. We like the products. We don't like the stock. There's a big difference.
Here's a half-dozen reasons:
1. The stock is up some 600+% over the past six months. The easy money has already been made. Late comers will likely become stuckholders.
2. The company is selling at a 10.6x multiple of sales, on a fully-diluted basis, while the industry average is somewhere around 4x sales.
3. There has been massive dilution of the common shareholder base as a result of a near doubling of the shares outstanding. More dilution is likely coming, as evidenced by the increase in the amount of shares authorized to 75 million from 50 million.
4. There has been a deceleration in the double-digit sales momentum that we saw from prior quarters. The sequential increase in sales from Q4 2014 to Q1 of 2015 was a paltry 1.3%.
5. We have seen a very disturbing move away from the guidelines that the National Advertising Division of the Better Business Bureau laid out for the marketing & advertising of Celsius. Promotion in the public media can be viewed as advertising in certain circumstances.
6. There are a number of ongoing regulatory risks that the entire energy drink market will face in the future.
Ponder the above, and realize that much has changed in the past few months. Stocks are dynamic, not static. Companies change too. Investors must be able to factor whatever changes occur, into their thinking, and ultimately change direction if it is warranted.
Another reason why we see slower growth ahead is that two of the international markets that Celsius is hoping to penetrate are experiencing economic stagnation, or at least a deceleration in growth.
Brazil continues to see a slowdown in GDP.
http://www.tradingeconomics.com/brazil/gdp-growth-annual
China is another story. Besides the China economy slowing, this past week the Shanghai Composite Index experienced its worst week, falling precipitously.
We were looking for a crash, and tried to warn investors of what was coming back on June 9. Since June 12th the index is down almost 20%; that's bear market territory.
https://www.facebook.com/photo.php?fbid=909454322427042
Quite frankly, we don't see how consumers in Brazil & China are going to justify spending their money on a high-priced energy drink?
Kezzek, it does sort of make you wonder why Carl would agree to that kind of arrangement, especially after he carried the company, on his back, for so long. They could have very easily structured a deal without his convertible note.
<<So while he increased his wealth by $1.5 million, those shares today would be worth $13.75 million or about 9 times what he got selling them.
Brilliant is not what I'd call it, though a couple of bad quarters and it may indeed be so.>>
Unfortunately, many of those shares were purchased on the run-up at higher prices than today's closing price. That's why they're called "stuckholders".
Hardly. As far as financial results go, are you referring to the 20% increase in revenues from Q1 2014 to Q1 2015, or the 1.3% revenue increase sequentially from Q4 2014 to Q1 2015?
No matter how you slice it sales momentum is slowing from the earlier pace. At one point revenues showed a quarter-over-quarter sequential growth rate of 66%, 61%, 51% and 65%
http://altitradepartners.blogspot.com/2014/08/august-11th-research-notes-trade-blog.html
A sequential increase of 1.3% is pathetic. A 20% increase from the previous year's quarter isn't much better.
As the revenue numbers get even bigger (if they do), large percentage comparisons are going to be even more difficult to come by.
BTW, we don't think Q2 2015 revenues are going to be all that great, and we see a lot of up-front costs, which will impede the chance of the company reporting any meaningful profit for the quarter.
Most likely, we will see a loss. Just our opinion.
The valuation was cheap. It isn't anymore.
After a parabolic price rise of 600% from 2014 year-end, and major dilution, which almost doubled the share count, the current valuation is unsustainable in our opinion.