What Happened?
Shares of energy drink company Celsius (NASDAQ: CELH) fell 5.6% in the afternoon session after the company reported first-quarter 2026 financial results that showed slowing growth for its main brand and declining profit margins.
Although adjusted earnings per share of $0.41 more than doubled from the prior-year period, investors focused on signs of weakness. The core CELSIUS brand's revenue grew by only about 6%, a figure that suggests a slowdown in its primary markets. While overall revenue increased, this was mainly due to the acquisitions of Alani Nu and Rockstar Energy.
A significant point of concern was the drop in the gross profit margin to 48.3% from 52.3% in the same quarter of the previous year. This decline was attributed to the lower margin profiles of the recently acquired brands, indicating that the new additions are less profitable and are weighing on the company's overall financial health.
The shares closed the day at $32.29, down 5.6% from previous close.
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What Is The Market Telling Us
Celsius’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 23.8% on the news that the company reported underwhelming earnings. The company announced impressive year-over-year revenue growth of 173% to $725.1 million, slightly ahead of estimates. Adjusted earnings per share of $0.42 also comfortably beat the consensus forecast. However, investors appeared to focus on the company's deteriorating profitability. Celsius reported a negative operating margin of 11%, a sharp decline from the negative 1.2% margin in the same quarter last year. This drop suggested that operating expenses, such as marketing and administrative costs, grew even faster than its impressive sales, raising concerns about its cost controls and the efficiency of its rapid expansion. Despite the strong top-line performance, the significant pressure on profitability seemed to spook investors, leading to the sharp sell-off.
Celsius is down 32.3% since the beginning of the year, and at $32.34 per share, it is trading 50.1% below its 52-week high of $64.86 from October 2025. Investors who bought $1,000 worth of Celsius’s shares 5 years ago would now be looking at only $683.25.
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