Celsius Holdings stock price is still priced for perfection

Celsius Holdings (NASDAQ: CELH) share price has retreated in the past few weeks as concerns about the company’s valuation and interest rates remain. The shares crashed from their all-time high of $205.32 to ~$160. 

Celsius Holdings has had an exciting ride in the past few years. The shares surged from less than $10 during the pandemic to a record high of $205.32. It has surged by over 65% in the past 12 months and by almost 4,000% in the past five years.

This trend is explained by the fact that Celsius Holdings is one of the fastest-growing companies in Wall Street. Its annual revenue jumped from $52.6 million in 2018 to over $952 million in the trailing twelve months. 

The most recent results showed that the company’s growth is gaining momentum. Celsius Holdings revenue soared by 114% in the second quarter to over $311 million. Its international revenue soared by 76% to $15 million.

At the same time, the gross profit jumped by 168% to $159 million while the gross profit margin soared to 49% of revenue. This happened even as the company’s percentage of sales and marketing dropped to 19%.

Analysts believe that Celsius Holdings revenue will continue surging in the coming months. In this case, they expect its annual revenue will be $1.24 billion this year and $1.73 billion in 2024.. This will be a huge number since the company made over $653 million in 2022.

The challenge for Celsius Holdings is its hefty valuation. It has a market cap of $13 billion, meaning it has a price to sales ratio of 19x. It has a forward 2024 PS ratio of 7.5. In contrast, Monster Beverage, which is growing at a slower pace, has a price to sales ratio of 7.93.

It is normal for fast-growing companies to have a premium valuation. Look at firms like Tesla and Chipotle Mexican Grill. However, with the stock priced for perfection, the management will need to maintain this growth in the foreseeable future.

The daily chart shows that the Celsius stock price has made a bearish breakout in the past few weeks. It has dropped by more than 24% from the highest point level this year. It is also on track for the second straight month and has retested the key support at $156.14, the highest swing on July 17th. 

Celsius Holdings share price has crashed below the 50-day and 100-day moving averages while the Relative Strength Index (RSI) is nearing the oversold level. Therefore, I suspect that the shares will continue falling as sellers target the key support at $134.27, the lowest swing on August 3rd. A move below that level will see it move to the key support at $122.20 (December 2022 high).

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