A Celsius Pricing Conundrum
Is it okay to drop prices 20% temporarily if you keep taking share from competitors?
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We released a podcast on Sunday with special guest Dave Ahern of Investing For Beginners. Here is what we discussed (links above):
(03:20) Berkshire Hathaway Energy Investments
(13:42) Brazil's Credit Upgrade and Nu Bank
(27:30) Nike Earnings and Market Position
(33:20) Small Cap of the Week: Gen Restaurant Group
(47:37) Port Strike and Its Economic Implications
(56:55) Boeing's Equity Raise and Market Strategy
Tomorrow, we have a fun research podcast coming out on Celsius Holdings. We discuss all parts of the Celsius story (Potential brand staying power, market share gains, international expansion, Pepsi deal), and whether I am adding the stock to my portfolio. I hope you will listen.
I thought this data from Beverage Insights was fascinating:
Celsius is clearly dropping prices to drive volume growth. The glass-half-empty view would say CPG brands only drop prices out of desperation. The glass-half-full view would say Celsius is doing this out of a position of strength as it keeps gaining market share in the energy drink category in the United States and that — eventually — it will raise prices again.
We don’t directly discuss this data on the pod — unfortunately, I did not see the tweet before we recorded over a week ago — but it relates to the deep discussion we had on the competitive set in the energy drink market and whether Celsius has or can develop a moat.
As we know, moat = latent pricing power = earnings predictability = shareholders are happy. If Celsius does have a developing moat, the stock looks cheap after falling 70% this year.
Give the episode a listen when it drops tomorrow! I think you will find it insightful.
-Brett
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