Pershing Square Challenge 2026 third place: Celsius $CELH
Summary
Celsius trades at ~20x earnings while growing ~18% a year, cheaper than Monster (~34x) and even Coke (~25x) despite faster …
Transcript
You're about to listen to yet another value podcast with your host, me, Andrew Walker. Uh today we have I am so excited. One of my uh passion projects. Do do not whatever you do, do not tell my wife. Do not tell my mother. But one of my true passions, energy drinks. We have from the Persian Square Challenge team Celsius is coming on. They came in third in the Persian Square Challenge uh contest. And we're going to talk about their pitch on Celsius and all the interesting work they did. They did a really interesting proprietary survey talking about uh consumers. They survey over 500 energy junk consumers, their willingness to switch, what happens if it's out of stock, all this sort of stuff. So, we're going to talk that. We're going to talk the Alani acquisition. We're going to talk upside. It's really interesting because this is a company that is growing, let's call it 10% per year. It's forecasted to grow. It's trading at a 20 XP and that growth is in line with to Monster, their best peer that is trading for 35 XP. And it's much higher than peers like Pepsi or Coke who are trading for similar or better PES despite much smaller growth. So it is an interesting story in terms of a it's a product I love. It's a product everyone can understand. It's an interesting story where they've got an acquisition. Uh they've got an integration risk. They've got risks of new entrance. They've got all sorts of risks. So we're going to talk about all the podcast. Why am I telling you that? But uh so we'll get there in one second. But first a word from our sponsor. And you know what? I'll just do the library now. This product this podcast is sponsored by TRDA. That's tr a.com. You've heard me mention it multiple times on the podcast over the past few months. TRA is a product that I really have come to love and enjoyed. It is ex it is bysiders interviewing each other. So you get a bull and a bear on a stock, a bear and a bear, a bull and a bull. They come together and they say, "Hey, I want to talk about Celsius and they talk about it." And if you are an investor and you have access to this network, it is by far the best way I know of to ramp up on a stock. You know, reading the company's 10K is one thing, but seeing two investors who have actually thought about, invested in, are following a stock talk about in real time all the risks, all the rewards, all the opportunities, what they're seeing, what the market might be missing. Seeing that on one page, it is the best way I know to think of a stock. And you know, particularly if you're a journalist like me and you come into a company, they're going to point out 15 different things that you've never thought of or 15 industry specific things that are really going to trigger your memory. So, if you are interested, go to troda t r a ta.com/c. That's the Celsius sticker. And if you go there, you're going to see part of a interview that I read to prep for this transcript between two bysiders who are a little skeptical of the Celsius story. And they're byiders who are really good at CPG. And they're going to tell you all the reasons why, including, hey, is energy drink right now just like protein 3 to four years ago where there were a flood of new entrance that really disrupted incumbents. So, I'm rambling. troda.com t r a ta.com. I think you're going to like it. I know I love it. And if you like this podcast, I think you're going to like it. So, thank you Trota for sponsoring this episode. and let's get to the Celsius podcast. >> All right. Hello and welcome to the Yet Another Value podcast. I'm your host, Andrew Walker. Today I'm happy to have I'm gonna call him team Celsius. Team Celsius from the Persian Square Challenge. I believe you guys placed third in the Persian Square Challenge with Celsius. So, uh, congratulations. >> Thank you. >> I I'm going to let you in yourselves in one second, but let's just get the disclaimer out the way. Remind everyone nothing on this podcast is investing advice. There is a disclaimer in the show notes. Full disclaimer at the end of the podcast, so people can listen to that. So, guys, again, congrats. I I'd love to if you guys could just take uh you guys might have been at a disadvantage because most of the other teams are three or maybe even four. You're a team of two, but I'd love if you could just take a second, introduce yourselves, give a little quick background if that makes sense. >> Thanks so much Andrew for having us on the podcast. Big fan of the podcast and it's a pleasure to be on this. Um I'm just llani. I'm from Mumbai in India. I spent about three years in private credit, venture debt and private equity back home focusing on financial services and consumer products in general and yeah came to Columbia Business School with the aim of working in the public market space going forward. >> Uh thank you again for having us. My name is Hide Okada. I'm originally from Tokyo, Japan. Before coming to CBS, I work at the Japanese Commercial Bank as a credit analyst. I'm here at CBS as a company sponsored student. Uh at CBS I have been taking range of investing classes to broaden my understanding across the asset classes. I joined to the person square challenge mainly as a learning opportunity and I was fortunate to team up with Jazz. He is a so strong analyst. >> Well, that's awesome. And Jess, by the way, uh I I've got to congratulate you on the timing because you mentioned private credit in your background and you know if Colombia I know first year starts in around August, leaving private credit to go get your MBA around August of 2025 is uh in benefit of hindsight that's about as good a trade as you can make. So let's dive into it, guys. Uh I I'd love to just start with uh you know the purchase square challenge. You want a value idea, all this sort of stuff, but picking the stock is one of the critical things. you know that's a strategic choice you could pick I think pretty much any stock in the world above a certain size so let's just start what what made you guys kind of zero in on Celsius as your choice >> so um let me quickly walk you through our thought process initially so we wanted to basically try to do something in a domain that we were comfortable with given my background was more than consumer investing um you know internet companies financial services companies or consumer discretionary were the three main sectors we were looking at and we did evaluate I think two companies from each of those sectors but I think we landed on Celsius because there was so much noise on both sides of the field in terms of it being a potential short as well as a potential long and we felt that as a company like there was avenue for us to do research and figure out which way we can get on to based on how to apply to the understanding of students. So like the survey we did for example which we can talk about later in the podcast as part of our pitch that gave us some great insights and I think had that come out to be negative we could have easily gone short on this company. That was the main idea for this and also we wanted to do something pretty fun. So I think it sort of ticked both buckets. Look, in terms of tactics, I just think the great thing is Celsius. You say Celsius energy drink and any any American consumer, I know the international is just getting started, but any American consumer be like, "Oh, I walked by it. They've got an idea." And as you mentioned, the first thing that jumped out to me when I was reading the deck and listeners can go there'll be a link to the deck in the show notes and everything. But it it was it starts on page eight, I believe, the proprietary survey you did. Like when I saw that, I was like, "Hey, you know, in terms of tactics, understanding like this is the thing you want in a contest." something that is something that's completely unique, something that shows you did the work and really drives it these home and I I just thought that was great. Eiday, did you want to add anything to that? >> Well, uh, the reason why I we choose energy drink, one thing I want to want to ask is I'm I'm probably one of the most experienced energy drink consumers at CVS. So, that is another reason. >> Yeah, you and me both, my friend. So, I'm tempted to go run to my backpack in prep for this podcast. I I bought an Alani and I will admit, oh, I like it. They've got the little Celsius packs now. You know, it's just a pack and every morning instead of buying these cans and having to take every morning I just get some cold water out the fridge, I take a Celsius pack. Strawberry coconut's my go-to, but I've got a few flavors, get them auto ordered from Amazon. And longtime listeners will know I I'm a big fan of energy drinks. It is it is good to me to fellow brethren there. Okay, so I don't think we need to talk about what Celsius is. Again, everyone, it would be shocking to me if there's anyone who doesn't know what Celsius is. Why don't we go to the more important question? We've talked about why you chose it. People know what it is. What makes Celsius interesting as a stock right now? >> I think I could take that and he could add on. Um, what we found pretty interesting about the stock was that Celsius has recently acquired this brand called Alani New, but the market has not really value that in too much in terms of its growth prospects going forward. So what we found is that the company continues on its growth trajectory primarily from the Alani acquisition and I think Q1 results have come and the brand has grown about 60% uh YI on that quarter and if it continues on this plan then it's we're looking at you know 18% type of threeyear forward growth which the market is just not valuing today given its forward multiple is only 20x today. So that's below market multiple for a company that's growing way above market expectations, way above the overall market in general, as well as expanding operating margin. So I think a mix of both of them is what makes this company really cheap today. Monster today is at a 34x forward. Coca-Cola today is also at like a 25x or 24x forward multiple. So we're way lower than both of these companies in spite of having growth estimates. Even if you just trust the analyst and not look at us, they believe this is going to grow in terms of earnings as much as Monster. So that's just a great advertise opportunity from our perspective. >> So it sounds to me what you're saying is look, you've got this company that is trading below the Coke multiple, below the monster multiple. It's growing faster. So the market is clearly missing it. What do you why do you think the market like again these are I I don't think you're unique in saying this, right? Like this is the type of thing you pull up Bloomberg and you can see in five seconds. Oh, monsters. Oh, I got X% growth and trades at 30x. Celsius has X plus 6% growth and trades for 25x. Why do you think the market is discounting the Celsius story? >> So, I think two main factors. One is like we mentioned that maybe the market is not focusing so much on the newly acquired brand Alani and is focusing more on the core Celsius brand which has only grown about 6% the last year and has continued to do so this quarter. So Celsius is on its own is sort of like a legacy brand now market level type of growth going forward. So maybe the market is pricing that in without focusing too much on the newly acquired brand. And number two might be a terminal value type of problem saying that you know there's a lot of competition in the space. You have a lot of new competitors coming in like Bloom is on the rise. You have update for example the new Kim Kardashian brand that's on the rise. You have ghost with the tie up with KDP. So a lot of incumbents are coming in and maybe like Kirkland Energy also for example applied with label launch which clashed the Celsius stock quite a bit. So this could maybe pose questions on terminal value. We don't believe so and our survey has found strong brand recall like you said every no Celsius today. So we don't think it's a product that's really going to go away in the next 5 years. You think about a consumer discretionary but maybe that's what the market's pricing in. >> Did you want to add anything there? Uh no I think the Jess question is Jess I I you actually hit were hitting on a lot of the things that I wanted to build on. So let's start. I don't think this is the biggest one but the stock did crash uh you know in February March about 15% when Kirkland when Costco/kirkland rolled out you know it it's never hey this is the Celsius knockoff but it is like hey this is Celsius you know back in my college days I like the five hour energies and Kirkland comes out and it was like a five hour energy they just didn't call that. Uh you guys have a interesting rebuttal to the Costco as a barecase thesis. So why don't we just go into that? Again, I don't think that's the biggest bare thesis, but it is the most approximate one. So why don't we start there? >> I agree with you. And you know, when that came out, we in the middle of our pitch, we're like, okay, we got to do some work about this for sure to try and see if we're wrong or not. Um and I think the work we did showed that we on the right track. Uh it's basically this. There's two main reasons why we believe Kirkland Energy is not going to pose a medium to long-term threat. Number one is most consumers typically buy energy drinks as an impulse purchase. 70% about your convenience stores. Like you said, you know, you're driving around, you're going to go to the gym, you have a construction worker heading to work, they pick up an energy drink, they want to have a good you they want to just drink it, get that energy bus, and go on, right? You're not going to order this in bulk. Like, you won't go to Costco and buy this in bulk unless you're a dieh hard fan in general. So, for this to work, you're going to have like, you know, a big change in consumer habits to have to kick in. And number two is if you look at private labels on its own, right? They typically work pretty well for staple products which are very price sensitive in nature like toilet paper for example, package water for example, not so much when brand value is in effect. Um we saw this play out with Kirkland sodas, you know, Coke and Pepsi did do pretty well against it. We also saw this with light beers. So we think that this is going to continue for energy drinks as well. And like you said, if they decide to copy Celsius now and not Monster and Red Bull, then Celsius is on the right path, right? Why would you copy something that's not working? So, >> you know, so on on the one hand, I like I had a push back to that and an agreement with that. So, my push back would be, you know, he he I'm sure can join me. If you're a real energy drink user, you order these things in bulk and you're drinking them. You know, you I I like to have one co if I'm drinking out the can, I like to have it cold in the morning and I'll I'll get an Amazon 24p pack. And moving on for me, like I was reading to prep for this, I was reading them at recent conferences and they talk about, hey, Celsius and Alani, they one of the interesting things about them is they skew much more heavily female, right? And they were talking about Celsius is a millennial target. A lot of times it's a working woman and it's instead of drinking coffee in the morning, you know, she wakes up and they talk about, hey, we overindex to Amazon, right? because the the person buys a 12-pack of Celsius, gets to deliver it, they have it daily in the morning. And when you start thinking about that consumer, whether it's me power chugging these things or the, you know, the more professional working woman, that is somebody who is buying them in bulk. So I I kind of like a monster. I do kind of get a few wrote out bulk monsters. A monster is much more the convenience store. I don't know with Celsius. I I don't know about that. So, I'll pause there because I do have a support for what you said, but I'll pause there on that push back cuz when I was reading it, I kept hearing them say Costco is not a big deal, but a lot of our and they are even pushing back on like credit card data saying hey ignore the credit card data because a lot of our people are ordering from Amazon and when I hear order from Amazon, I am hearing we order in bulk and that Costco is a risk. So, I'll pause there and then I have a positive support. So for sure we do agree that you know compared to other energy things I think Celsius is revenue 10% of that comes from Costco the industry average is five. So you're not incorrect to say that but 10% on its own is still a pretty small number if you look at I mean the entire pie and um number two is just to say that as a habit like usually what we found from our survey also is that this is more impulse in nature and again Celsius and Alani are today still sold at a Costco. So it's not that the customer if they really are brand loyal which is again what our survey said they're not going to pick up another drink because it's going to be cheaper because they want that flavor profile that Celsius gives them and the feel that that Celsius will give them. So that's what we believe will go forward and I think quarter 1's data has shown that growth has not really fallen. Quarter two will be super strong again because this roll out has not happened as much. So I think that will be a great indicator for that thesis per se. >> Yeah. And then on the support side of the piece, I mean to what you're saying, >> there is a long history of private label brands, whether you go back to Sam's Club Coke or, you know, whatever it is, it's just even if you have the exact same flavor, which it's not, but even if it was the exact same flavor, there is something about when you're eating something, when you're consuming and especially drink, uh like beer is another great example, like there there just is something about the brand that the the store club doesn't match. Whereas if it's something, you know, a paper towel is a paper towel whether it's the PNG brand or the Costco brand, you don't even know once it's on the roller, but once on the roller for the most part. So I think history does suggest that hey, these private label brands just with drinks in particular, it's very difficult. And I think you guys did a great job of pointing that out in your rebuttal. Anything else on the Costco risk or the private label risk you want to talk about? Or there's plenty of other things I want to talk about here. >> No, you're spot on. I think he did you want to add something? >> Well, adding some data point uh regarding the energy drink private label brands only have like 0.5% share overall. So yeah uh as we discussed um I think the customer nature is pretty different from other consumer products. So yeah we are comfortable about um so far the private label brands are not a huge risk for our thesis. We've mentioned the proprietary survey that you guys did a few times. And again, I I thought this was great and it it was so interesting reading it and seeing the difference. Why don't we talk I I want to step back and we'll come back to the stock and everything in a second, but why don't we talk a little bit about the proprietary survey you did and I want to talk about all pieces of it. A you know my again the listeners can go see it's page eight of this slide deck. I'll include a link to but what was the proprietary data? What were the learnings and kind of how did you guys let's talk about the methodology. How did you go about structuring this getting it commissioned? all this sort of stuff. So I'd talk about the the whole overview kind of from soup to nuts if that makes sense. >> Yeah. So uh let me talk about the overall um characteristic of the survey. So we run a proprietary survey through the professional research panel called prolific. So uh three findings stood out. First Alani had the highest repurchase score in the entire category. Second Celsius score was probably in line with Monster and Rull. So Celsius is a not a fat brand. This is with the established incumbents on loyalty. And third and this was interesting one but newer brand like blue or ghost show weak loyalty. So their own buyers rate established brand higher. So that tells us entrance in the female segments are struggling to build real loyalty while Alani already has it. Uh we also look at the repeat behavior uh repurchase behavior for Alani new meaningful share of consumers said they expect to buy the brand more often over the next six months. Salesis also showed a positive signs and along although it is already more mature brand than Alani and the another important point from our survey is what consumer do when their favorite energy drink is not available. Uh I think we discussed about this uh but already but this matters because it's tell us whether energy drinks are plant purchase or impulse purchase. The result were very clear and 63% of consumers said they would switch brands and buy their second preference. Another 8% said they would just buy whatever drink is available. So more than 70% of buyers are willing to switch on the spot rather than walk out empty-handed. So the main point is that availability matters a lot and if the product is not in the on the shelf many consumer will not wait and they will switch. So this is why distribution as shelf presence are so important in this category. Strong brand strong brands matter but the brands also need to be available at the moment of purchase. >> So this will bleed into so Celsius for those who don't know is distributed by Pepsi. Monster is distributed by Coke. Well I'll talk about that later but this will kind of bleed into it. You know, I thought it was interesting a, you know, when you're reading it and you read the first the first line in the proprietary survey, which is look how strong the survey says that Celsius and Alani are in terms of uh retention and brand loyalty versus others. You read that and you're like, oh, that that's nirvana for a brand, right? If you're if your brand if your people are more loyal like you grab more sh all the it's just a really great sign. But then I read slide 10 and as Heday mentioned I I'll just kind of round it. If you really break down, you got five different things that people can do. And if you break it down, if somebody goes and their fla their preferred flavor is unavailable, it kind of rounds to 90% of the people are going to buy another energy drink right there and then, and 10% of the people will uh it's actually 12%. 8% of them will go find uh go to another store to find the brand that they want. And that's I mean, that's where you're really talking, right? I'm going across the street to find it. And then 4% of them will skip buying energy drink also. And you guys were using this as um kind of a bullcase. And when I read it, I actually was kind of thinking, oh, this is an example of distribution is much more powerful because, you know, if somebody goes in there saying, I want a Celsius, and there are no Celsius. There are just ghosts and monsters. I'm just picking off top of my head. There's a nine and 10 chance they're going to buy that. So, you know, if I'm a ghost or monster uh brand and I can go to 7-Eleven and say, "Hey, we're going to buy you out, right?" no Celsius for you. We're gonna give you advantage pricing. And 7-Eleven might say, "Oh, but we're gonna lose sales." And they say, "No, the survey says nine out of 10 people are going to eat it and still buy the Monster." So, I was kind of looking at that that as a bare case that, you know, people are less sticky because I just to ramble for one more second. You know, I'm sure we've all gone been with friends, gone to a restaurant, and the friend says, "I want a Diet Coke." And the waitress says, "Oo, I'm sorry, sir. We only have Diet Pepsi. Can I bring you Diet Pepsi?" I will tell you it's way higher than one in 10 friends are saying no. Like it's probably twothirds saying no, one-third saying yes. So, and that was just an example to me of, hey, I don't know if these brands are as strong. So, I rambled a lot. I I'd love to just toss those thoughts over to you because you all said bullcase and I was kind of seeing a barecase there. >> That's a good point and I'm glad you brought that up. So, the reason why we put that as a bull case is to highlight that brand loyalty is super important if all options are available to you. right now through Pepsi's distribution network and our our research found that Pepsi has one of the most penetrated in the US and North America today. So, you're way more likely to find a product that is distributed by them, which is going to be Celsius and Alani on your shelves today. To your example, if a ghost were to go to a 7-Eleven and say, "I want to buy out everything." They're going to be like, "Hey, you know, we have relationships with Monster, Red Bull, and Celsius or like Pepsi." And they're not going to let us do that, right? Because those guys just come and say, "Hey, you know what? We'll give you a better discount. We'll give you a better promo." And this is what we got when we spoke to a current sales rep that used to work at Alani and now works at Monster. So this is their sales strategy in general. Like when they need to move a product or when they want more shelf space, they simply lower prices, put out promos and get that done. So having that distribution is super super important. And like we said um when the main competitors over here which are your ghost or your bloom for example if they are more likely to go to Alani then that's strengthens Alani's own brand standing. Another bare case point is that Alani is just a fad. Hey it was just a fad and they're going to lose to incumbents. The incumbents like Alani almost as much if not more. So that was our thinking on this. >> He did you want to add anything there? Um uh I think Jess explanation is thorough but our point is um uh Celsius has both of the brand and the distribution network. So um uh if you look at the other competitors um uh the someone who has both is pretty rare. So we thought this is the mode. Let's spell off distribution then. So Celsius is distributed by Pepsi and Pepsi and Celsius I I mean they are intertwined. Why? I think in 2025 Pepsi has Rockstar which I don't think it's crazy to say they mismanaged. You know Rockstar was a burgeoning brand in like kind of 2008 to 2012 range if I remember correctly and never took it kind of sold out as soon as Rockstar got it. It never took off and they sold it to Celsius. So Pepsi has a equity investment in Pepsi. They're really tied up. You know there is a parallel. Monster and Coke have had a similar type relationship for a while where Monster is independent but Coke owns a bunch of equity and KO's basically said Monster is our energy portfolio. That's basically where Pepsi and Celsius is. But you know, it does kind of strike you based on my bare case where I say, "Hey, it seems like distribution matters more than brand." Right now, Celsius is their brand. But we're talking about some if you say 20x multiple, right? You kind of need 20 years plus of earnings to just get your money back. 20 years is a long time. Pepsi might change their strategy seven years from now. You know, maybe they want to launch. How do you think about the dynamics and the risks of the Pepsi relationship when you're relying so heavily on that distribution? And like, you know, the last thing I'll say there is if you lose Pepsi, there's Pepsi. Coke's locked up with Monster, so you don't have Coke. There's Cured Dr. Pepper, but they've got ghosts and they don't have great distribution. I think they lean on kind of the Coke and Pepsi distribution a lot. So, if you lose Pepsi, there there's kind of no one else. So, it feels like all the powers over there. How did you all think about that? >> I think you did hit the nail on the head on that. that it is super important for an energy drink plan to have you know that distribution network in place and Pepsi is literally everywhere in North America today. Um why we believe that Pepsi is not going to start its own energy building plant is two main reasons. Number one is when we spoke to an ex Red Bull EVP, he said that, you know, typically innovation is pretty tough to come by by existing legacy brands as a reason for why Red Bull Monster could not capture the market Celsius was in. Um, you know, given it was a duopoly for so long, Celsius became so big, they could have easily copied it. They've tried to like put out products competing against it. They've not done as well because you need that DNA, you need the understanding of consumer, you need the team to be at it in order to get that done. And that's been difficult. Now, similarly, Pepsi and Coca-Cola have also faced the same issues. If you look at what they've done the last 10 years with the soda business going down as much. Coca-Cola's focused a lot more on the acquisitions. Not all have worked out. Some have worked out brilliantly well, but it's all been acquisition focused. It's not been we're going to start our own division or going to start our own thought vertical targeting towards this mainly for this issue. That's what we've noticed and that's why we believe that it's not going to be likely that Pepsi is going to do this. And number two is the equity stake as well. Pepsi has 11% stake in Celsius. So for it to start its own energy drink company would be for it to devalue its own equity stake in this company. Um even though it's easier for them to really lie on saying hey you know we have a great distribution network today. Let's continue backing this product by ensuring it gets everywhere. These guys seem to be doing something correct in they're the largest sugarfree company that that is today in the space. then I don't see a reason why they want to compete against that. >> No, look, I I I certainly hear you though. It's an 11% stake. Let's just round it and say it's worth a billion dollars and Celsius is a $10 billion market cap, right? Like I definitely hear you, but I it does always jump out to me as it's like, hey, they've got the equity stake. They're not incentivized to be. It's like, well, yeah, but would they rather like build their own thing and own a 100% of something or would they rather own 11% of this thing that, you know, they still won't control the brand? And it's just a tough one. Let me go to two other rac. If I go back to earlier in the presentation, you guys, it seems, are really bullish on the Alani acquisition. And you know I I think your bullishness I think a lot of people are worried that Alani it grew and the Pepsi distribution will help them right but I think a lot of people are worried that the growth is it's funny to say this about Celsius because they're a sugar-free company and Alani is a sugar-free I think they're worried it's a sugar high type growth right where they were doing a lot of LTO's limited time only a lot of special flavors maybe a lot of discounting I think people are worried that the growth there is uh temporary it's a sugar Okay. And then the other worry I tack on is Jess, I believe you mentioned, hey, Celsius is kind of hitting the mature phase. And I think a lot of bears would say, hey, you know, Celsius is supposed to be this great growth product. There's still a lot of shares to capture, whether it's domestically or particularly internationally, and they went out and bought Alani. And people generally go do like bolt-on acquisitions, not when there's a lot of growth left on the core product. They kind of do it when the growth is starting to sol and they say, "We need a new vector." So I I think those are the two bare points I'd say on the Alani acquisition. I'll toss that over to you guys to address either way either one in whichever way you want to. >> So just before answering that question, I think um another point that just struck me about the previous topic of conversation was Pepsi did have Lockar, right? So if it did want to grow an energy drink plant, it did have the option to do so, but it chose not to do so and it didn't work well. There you go. So um yeah I think that that's like more enough for maybe the next 5 years. Of course you can't predict the future like you said 20 years out but I think for the next 5 years it is that is the case and monsters multiple has never deflected this this such right like monster has faced the same risk for the last 10 years 15 years never faced that issue so I think it'll be a little unfair just to be less Celsius on that >> if I can add on I mean look I think once or twice and I can't remember I I haven't brushed up on my notes in monster I think once or twice Monster and Coke went to the the brink now coke owns more monster but I think your your real bull point would be both what you said, hey, Pepsi got out of the game. They gave Rockstar over to uh Celsius and then B, Monster and Coke got to the brink and every time both of them came up back to the table and Monster stock has been a rock star to use a interview. So like I even though I look at it and say, hey, it seems like the distribution is way more important. Uh, you know, the brand has been able to pull through here. So, I think there's a, you know, if there was no Monster Coke relationship, I would think this was a much bigger risk, but you had to stress it. Anyway, let's talk. I was hitting on the Alani acquisition, both the sugar high piece of it and the hey, is the Celsius piece start out? I'd love to hear what you all's thoughts are on that. >> Hey, do you want to go first on this? >> Um, Jazz, please go ahead first for me. >> Okay, sure. No worries. Um yeah, basically I think first on the acquisition, if you want to talk about it, I think what Celsius the management realized was that their product like you said was targeting most of the millennial women as well as Gen Z like most of the Gen Z males. They realized there was a big hole in terms of targeting Gen Z women. They realized Alani was the biggest brand in that space and that's a growing sector in Chandville. So I think we had a couple of slides detailing also where growth in sugar-free is coming from and it was this area. So for them to get an asset at $1.8 billion for a brand that then went on to do $1.3 billion of sales the same year was pretty effective use of capital at that point. So it was more of addressing a market that they were not to winning at a market that was going pretty big and recognizing a brand that had potential to go on and supplement its own offerings pretty well. So pretty efficient capital allocation. Um two is on the international growth piece. I think the the company management has also had a lot of messaging about how they want to go about this in a pretty cautious manner. Um international expansion has never been super big per se on their plans. Um recently they did enter into a lot of planning agreements like they are sponsoring the Aston Martin F1 team for example similar to what Red Bull and Monster have been doing. They have distribution agreements in Centoi available out there. Um but it's not going to be super big and I think it's going to be a three to five year forward type of vision given international revenue is only 5% of the business today. So the main focus is going to be the US domestic markets and number three would just be if you look at Celsius on its own right I mean 6% is broadly market level type of growth. Um so they've achieved like you know a standalone brand share of about 10% in the total market. they've got on another brand that is going to continue to grow and they're focusing on more of a portfolio of brands approach rather than a one brand company approach. So that's what we think is going to be the main uh key aspect of this going forward. Yeah. >> Let me switch a little bit. So I I've got two last questions then we can maybe talk international for a second then wrap this up. But you know I was prepping for the this call and reading the tro call and there was one thing in it that just really jumped out to me. somebody it was an analyst who followed consumer for a while and he came out and he said hey the energy drinks right now remind me of protein a few years ago and he mentioned look there were the old incumbents there was uh like insure which your parents you your grandparents when they couldn't eat like that the insured part there was muscle milk which I took a lot of in college I was a big muscle milk guy the cookies and cream flavor and what they said was look they all got disrupted by newcomers and then over the past three years cuz like the pace is accelerating and you know the brand is easier to build than ever with Instagram and influencers all this. The newcomers got disrupted by the new newcomers, right? So, and I I I will just give a brief anecdote. When I was in college, which was 20 years ago, which actually works nicely for the story, I I I worked at a vitamin world. You know, I selling vitamins and and a vitamin world just opened underneath my little shoe box office that that I have in New York City. and I go there, you know, once twice a week to get an energy drink, but when I walk by the protein, I don't recognize 95% of the brands. Right now, 20 years is a long time, but we've mentioned Celsius trading at a 20x multiple. You're you're underwriting 20 plus years of terminal value. And to bring it back to the protocol, they were saying, look, it reminds energy drinks right now remind me of that then. Like you had Red Bull and Monster, and then you had Celsius Gump, but now we've got Elani. Now we've got Ghost. And guess what? There's a lot of brands coming underneath that. Liquid Death is coming out with an energy drink and Liquid Death, you know, if they can sell freaking bottled water in a can. Like, what what can they not sell? You know, Liquid Death's coming out. You guys mentioned Bloom. Uh C4 has been pretty popular. I think that's been around for a while. Uh there's Form, which I thought was a 7-Eleven house brand cuz I only saw it at 7-Eleven. I guess it's an energy brand, but there's a lot of others. And if you go Google, you'll see a lot of others coming up. Bucked Up is out there. There's Bum Energy. I think Bucked Up is Jaco. I don't really know him, but he I think but all these influencers are starting to come out. I think Jake Paul had one. So, I worry that we talked about the distribution mode, but I do worry that there's just a lot of brands coming out here and it's going to get really competitive and that protein thing. Now, protein is a different thing than uh protein is a lot lighter, easier to ship, but a lot easier to put in a small space, but I I really have worries that there's a lot of competition coming. So, again, I rambled a lot. I'd love to hear what y'all's thoughts on that is. >> For sure. So, I think in a nutshell, what you're trying to say is that there's a lot of fads going on right now, right? Is Alani and Celsius just a fad? Um, and I think we did have a slide to cover this because this was this point that we also considered when we were thinking about, hey, should we go short this stock? Because it's just a fad. It could go to zero. 20x is way too high for something like this. Um, but I think we had two main data points that contradicted the fat view that we had. Number one is uh both the Celsius and the Alani brand have reached some sort of escape velocity in terms of revenue. They're both about $ 1.5 billion dollars today. Um no energy drink company has got to that size and has failed, right? All of them have then only gone on to be bigger. Um and I know you're saying that if you look at a forward view perspective, so let's take Prime Energy for example. You mentioned that that was Jake Paul's brand for example. It had a huge upsell. You know, they had insanely loyal customers for a short period of time. They were the number one Google trending brand even above Monster and Deadpool at some point but they fell equally as fast because there was no real market for them and because customers beyond a point like okay you know we tried it once because the influencer told us to not so much anymore. Um these are >> can I It's so funny man because Prime is just like the perfect example where I remember I walked in I was like what is this brand I had no idea and then I I saw I was a Jake Paul and like three weeks later at the CPS it was like buy one get 5,000 free please take all the prime drinks from us. So it is a great example and another one I would just throw on to Bang energy drink you know that that was a big one they uh they did a lot of viral marketing on Instagrams with there was a crazy article uh detailing it you know it was girls in bikinis to sell these things it was very hot for a while it was not sustainable and that's gone but to your point like monster Red Bull and probably Celsius once you kind of hit over a billion dollars it's probably sustainable so I'm sorry for interrupting please continue >> you're spot on with that that you know u so the The core aspects for this is like you said, it's pretty easy to get a lot of traction early on. But what differentiates a fad from like actual loyalty is continuous repeat customer purchase without spending marketing dollars on that. Right? Um now we're seeing early signs of that. Like this quarter for example, SGNA as a percentage of revenue has fallen by about 500 pips for the company. So they're not throwing money at marketing to get the sales that they're getting to right now. um the loyalty survey thing that we did, right? It shows that hey, customers really want to buy this product and increased frequency was what they indicated saying that hey, you know what, we're going to continue buying this product. You won't really do that for something that's just a fad or when you have so many options available, they may say, hey, you know what, you want to try something else or maybe there is an alternative flavor you're going to try or things like that. There was not a lot of negative sentiment per se, especially towards Alani. So that's why we thought that this brand has proven to be, you know, a company that has come up from a community base of just how they they're building themselves. They've always put community first. A lot of their phone flavor offerings also, for example, have come out from the community itself. So the cotton candy flavor, which is one of Alani's top selling SKUs, came up from the community because a lot of people were just commenting on Tik Tok saying, "Hey, you know what? Let's cotton candy." They put that to the test and they've actually gone about to do it. So they focus time on community building. They have enough scale. The Pepsi distribution is going to get them into more places as such. And that's why we think this one is not going to be a fad in general, but is going to be one of the companies to stay quite a bit. So yeah, >> I asked this as my my fellow energy brethren. Do you like Celsius or Alani? >> Well, I'm almost I'm almost addicted to Celsius and Alani. And uh I'm really jealous because uh I'm from Japan and so far Celsius and Alani are not available in Japan. So I'm waiting for their international expansion. >> Look, one of the bull cases for Celsius is 5% international sales. The monsters at 40. So you're you're just uh laying out why the the bullcase exists. I don't know. Like the one thing is Alani and Celsius are their flavor profile is so different than everything else on the market. You know, Alani is really effing sweet and Celsius it's like uh I I don't even know how to describe the flavor. It's weird fruit flavors for the most part. They're very strange. I'm I'm not a big fan compared to all of them, but I just think it's interesting how a ghost versus a rain versus a monster. I I I couldn't really tell the difference. I I hate Red Bull. I could obviously tell the difference if I drink Red Bull, but when I drink a Celsius or a Lani, like there's something about it. I I would instantly know that it was that. So, I don't know. It's probably neither here nor there for the stock, but it's interesting. Last question. Let's talk valuation real quick. Uh this is a I call the 10. It's actually I think a 7 and a half billion market cap right now. EV rounds to about 10 billion. You know, I I I'm just looking uh if you forward estimates are probably high to high singledigit to low singledigit revenue growth. You know, I'm looking at Bloomberg. They've got $2 per share of EPS in 2027. So on a $30 stock, that's like two year Ford out. Let's just call it 15 times EPS. It's not expensive. That's cheaper than the market multiple. But also I you know when I look at those numbers and I I talk about the distribution risk from Pepsi that might rear its head at some point. I talk about the market is getting competitive risk the risk with the particularly the Alani fad risk. You know it's not screaming at me hey this is smashing me in the face alpha opportunity. So I'd love to just ask you guys how do you guys think about valuation here? >> Yeah. Okay. So I think um interesting point on the consensus numbers and I think a lot of the consensus numbers are going to change given how the next couple of quarters are going to be because there's going to be an effect of how they're going to take in the Alani acquisition in terms of how that's coming along. It's going to be an effect of the private label like you said the biggest risk that they're facing. Is that really working? Is that really not? So I think there a lot of triggers or catalyst that can really push the stock upwards or can change the earnings estimates as such. Um if you to look at how we've gone out to build our model, we basically said hey operating margin to expand by about 200 bips over the next 3 years. Um sales going to grow by about 18% gag over the next three years mainly led by Alani. Uh we all think those numbers are pretty insane and like okay one quarter is only gone by but Alani has met that number so has Celsius. Um and then we get like a scenario which is I think 2.6 in terms of where the 28 number is going to be at the 27 number. was slightly higher. But that's basically how we've done it more in terms of like a fundamental approach. And then we're like, okay, if you were to give it the multiple it had before the Kirkland associated crash, it would then give you the what we had of 25%. um that now that multiple I guess is pretty much everything saying okay you know why would that company get the multiple and I think that's when the bull case starts to come in saying you know if 3 years down the line this company is going to have about 4 to5 billion of total sales it can then start looking at international expansion and then is where the monster story starts kicking in in our opinion saying hey you know monster went from about 5 to 10% international to 40% in 10 years can this company also do the same thing um pretty much so I I don't see any reason why like Asia is a very low hanging fruit about that. Like EJ said, Japan loves energy drinks. A lot of the Asian countries do a great avenue to enter over there. The flavor profiles are pretty similar. Um so it's just a matter of finding the right distribution partner and I think that's where we came from per se. Um so yeah, it's basically divergence from these estimate numbers is where we're coming from. No, in many ways, look, I I think you guys I I mean, this is a one stock pitch, but in many ways, I think the more interesting thing about Celsius, and I'll remind everyone nothing on this podcast investing advice, but it's almost the arbitrage point out, right? Like, hey, this is trading at, let's just say 20 20 times PE and Coke, which is much slower growth, is trading and probably, you know, GLP1 sugar head wins. It may be a sugar. I mean, I'd love it if we taxed the sugar in the future, but you know, Coke is forecasting 8% for growth. So, Coke trades at a bigger multiple and it's growing slow. Now, Coke also has the Lindy effect of 100 years of the Coke brand and international, but Maser, you know, I I think it's got a similar revenue estimate growth and it's trading for 35 times P and Celsius again trading at 20. So, like even if you said, "Hey, Andrew, I'm with you. There are distribution worries here. There's comp competition." Well, guess what? the competition concerns play double for Monster because Monster's got more of the market. So if this is fragmenting and you know monster is probably a little less it as I said it t monster and rain tastes the same now monster and rain are owned by the same people but monster might be a little less differentiating in Celsius so the competition concerns might hit them harder like to me like it makes sense long thesis but almost it's unfortunate you can push like the long short side of it you know because it seems like in the basket or KDB is a completely different animal but uh let's see yeah I think we cover that anything else on valuation you would talk Well, >> I think I think you hit the nail on the relative part, right? I mean, I spoke a little bit more on the insensic part where we came from, but yeah, relative scale 20 XP. If you look at just the broader market, like we said, right? Yeah, you have this, but so does the broader market in general today, especially at these valuations. Um, even if you were to let's say discount growth a little bit, you look at the operating margin expansion component, you're still looking at a double-digit earnings type of profile of 12 15%. um at a lower than market multiple which is still pretty fair. So it's still a unique opportunity to enter this company definitely. >> Perfect. Perfect. Well guys look I unless you have anything else you want to talk about I think we can go ahead and wrap it up here but uh anything else we should have hit or anything from your side? >> Nothing from me. >> Well look a I want to tell you guys congrats again. I I I've said it in some of the other pods, but every judge has told me this is by far the best set of uh entrance just from the both the finalist, but even before the finalist. So, uh congratulations on and third place. I mean, that's awesome. So, congratulations on that. Thank you guys so much for coming on. Again, I'll include a link in the show notes to their deck, which I keep looking over here at their deck and everything in the show notes, and we'll have some contact info in there if anybody wants to reach out and anything. But Jos Eiday, this has been awesome. Thank you guys so much for coming on and we'll talk soon. >> Thank you, Andrew. Appreciate it. >> Thank you so much, Andrew. >> A quick disclaimer, nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial adviser. Thanks.
Pershing Square Challenge 2026 third place: Celsius $CELH
Summary
Celsius trades at ~20x earnings while growing ~18% a year, cheaper than Monster (~34x) and even Coke (~25x) despite faster …Transcript
You're about to listen to yet another value podcast with your host, me, Andrew Walker. Uh today we have I am so excited. One of my uh passion projects. Do do not whatever you do, do not tell my wife. Do not tell my mother. But one of my true passions, energy drinks. We have from the Persian Square Challenge team Celsius is coming on. They came in third in the Persian Square Challenge uh contest. And we're going to talk about their pitch on Celsius and all the interesting work they did. They did a really interesting proprietary survey talking about uh consumers. They survey over 500 energy junk consumers, their willingness to switch, what happens if it's out of stock, all this sort of stuff. So, we're going to talk that. We're going to talk the Alani acquisition. We're going to talk upside. It's really interesting because this is a company that is growing, let's call it 10% per year. It's forecasted to grow. It's trading at a 20 XP and that growth is in line with to Monster, their best peer that is trading for 35 XP. And it's much higher than peers like Pepsi or Coke who are trading for similar or better PES despite much smaller growth. So it is an interesting story in terms of a it's a product I love. It's a product everyone can understand. It's an interesting story where they've got an acquisition. Uh they've got an integration risk. They've got risks of new entrance. They've got all sorts of risks. So we're going to talk about all the podcast. Why am I telling you that? But uh so we'll get there in one second. But first a word from our sponsor. And you know what? I'll just do the library now. This product this podcast is sponsored by TRDA. That's tr a.com. You've heard me mention it multiple times on the podcast over the past few months. TRA is a product that I really have come to love and enjoyed. It is ex it is bysiders interviewing each other. So you get a bull and a bear on a stock, a bear and a bear, a bull and a bull. They come together and they say, "Hey, I want to talk about Celsius and they talk about it." And if you are an investor and you have access to this network, it is by far the best way I know of to ramp up on a stock. You know, reading the company's 10K is one thing, but seeing two investors who have actually thought about, invested in, are following a stock talk about in real time all the risks, all the rewards, all the opportunities, what they're seeing, what the market might be missing. Seeing that on one page, it is the best way I know to think of a stock. And you know, particularly if you're a journalist like me and you come into a company, they're going to point out 15 different things that you've never thought of or 15 industry specific things that are really going to trigger your memory. So, if you are interested, go to troda t r a ta.com/c. That's the Celsius sticker. And if you go there, you're going to see part of a interview that I read to prep for this transcript between two bysiders who are a little skeptical of the Celsius story. And they're byiders who are really good at CPG. And they're going to tell you all the reasons why, including, hey, is energy drink right now just like protein 3 to four years ago where there were a flood of new entrance that really disrupted incumbents. So, I'm rambling. troda.com t r a ta.com. I think you're going to like it. I know I love it. And if you like this podcast, I think you're going to like it. So, thank you Trota for sponsoring this episode. and let's get to the Celsius podcast. >> All right. Hello and welcome to the Yet Another Value podcast. I'm your host, Andrew Walker. Today I'm happy to have I'm gonna call him team Celsius. Team Celsius from the Persian Square Challenge. I believe you guys placed third in the Persian Square Challenge with Celsius. So, uh, congratulations. >> Thank you. >> I I'm going to let you in yourselves in one second, but let's just get the disclaimer out the way. Remind everyone nothing on this podcast is investing advice. There is a disclaimer in the show notes. Full disclaimer at the end of the podcast, so people can listen to that. So, guys, again, congrats. I I'd love to if you guys could just take uh you guys might have been at a disadvantage because most of the other teams are three or maybe even four. You're a team of two, but I'd love if you could just take a second, introduce yourselves, give a little quick background if that makes sense. >> Thanks so much Andrew for having us on the podcast. Big fan of the podcast and it's a pleasure to be on this. Um I'm just llani. I'm from Mumbai in India. I spent about three years in private credit, venture debt and private equity back home focusing on financial services and consumer products in general and yeah came to Columbia Business School with the aim of working in the public market space going forward. >> Uh thank you again for having us. My name is Hide Okada. I'm originally from Tokyo, Japan. Before coming to CBS, I work at the Japanese Commercial Bank as a credit analyst. I'm here at CBS as a company sponsored student. Uh at CBS I have been taking range of investing classes to broaden my understanding across the asset classes. I joined to the person square challenge mainly as a learning opportunity and I was fortunate to team up with Jazz. He is a so strong analyst. >> Well, that's awesome. And Jess, by the way, uh I I've got to congratulate you on the timing because you mentioned private credit in your background and you know if Colombia I know first year starts in around August, leaving private credit to go get your MBA around August of 2025 is uh in benefit of hindsight that's about as good a trade as you can make. So let's dive into it, guys. Uh I I'd love to just start with uh you know the purchase square challenge. You want a value idea, all this sort of stuff, but picking the stock is one of the critical things. you know that's a strategic choice you could pick I think pretty much any stock in the world above a certain size so let's just start what what made you guys kind of zero in on Celsius as your choice >> so um let me quickly walk you through our thought process initially so we wanted to basically try to do something in a domain that we were comfortable with given my background was more than consumer investing um you know internet companies financial services companies or consumer discretionary were the three main sectors we were looking at and we did evaluate I think two companies from each of those sectors but I think we landed on Celsius because there was so much noise on both sides of the field in terms of it being a potential short as well as a potential long and we felt that as a company like there was avenue for us to do research and figure out which way we can get on to based on how to apply to the understanding of students. So like the survey we did for example which we can talk about later in the podcast as part of our pitch that gave us some great insights and I think had that come out to be negative we could have easily gone short on this company. That was the main idea for this and also we wanted to do something pretty fun. So I think it sort of ticked both buckets. Look, in terms of tactics, I just think the great thing is Celsius. You say Celsius energy drink and any any American consumer, I know the international is just getting started, but any American consumer be like, "Oh, I walked by it. They've got an idea." And as you mentioned, the first thing that jumped out to me when I was reading the deck and listeners can go there'll be a link to the deck in the show notes and everything. But it it was it starts on page eight, I believe, the proprietary survey you did. Like when I saw that, I was like, "Hey, you know, in terms of tactics, understanding like this is the thing you want in a contest." something that is something that's completely unique, something that shows you did the work and really drives it these home and I I just thought that was great. Eiday, did you want to add anything to that? >> Well, uh, the reason why I we choose energy drink, one thing I want to want to ask is I'm I'm probably one of the most experienced energy drink consumers at CVS. So, that is another reason. >> Yeah, you and me both, my friend. So, I'm tempted to go run to my backpack in prep for this podcast. I I bought an Alani and I will admit, oh, I like it. They've got the little Celsius packs now. You know, it's just a pack and every morning instead of buying these cans and having to take every morning I just get some cold water out the fridge, I take a Celsius pack. Strawberry coconut's my go-to, but I've got a few flavors, get them auto ordered from Amazon. And longtime listeners will know I I'm a big fan of energy drinks. It is it is good to me to fellow brethren there. Okay, so I don't think we need to talk about what Celsius is. Again, everyone, it would be shocking to me if there's anyone who doesn't know what Celsius is. Why don't we go to the more important question? We've talked about why you chose it. People know what it is. What makes Celsius interesting as a stock right now? >> I think I could take that and he could add on. Um, what we found pretty interesting about the stock was that Celsius has recently acquired this brand called Alani New, but the market has not really value that in too much in terms of its growth prospects going forward. So what we found is that the company continues on its growth trajectory primarily from the Alani acquisition and I think Q1 results have come and the brand has grown about 60% uh YI on that quarter and if it continues on this plan then it's we're looking at you know 18% type of threeyear forward growth which the market is just not valuing today given its forward multiple is only 20x today. So that's below market multiple for a company that's growing way above market expectations, way above the overall market in general, as well as expanding operating margin. So I think a mix of both of them is what makes this company really cheap today. Monster today is at a 34x forward. Coca-Cola today is also at like a 25x or 24x forward multiple. So we're way lower than both of these companies in spite of having growth estimates. Even if you just trust the analyst and not look at us, they believe this is going to grow in terms of earnings as much as Monster. So that's just a great advertise opportunity from our perspective. >> So it sounds to me what you're saying is look, you've got this company that is trading below the Coke multiple, below the monster multiple. It's growing faster. So the market is clearly missing it. What do you why do you think the market like again these are I I don't think you're unique in saying this, right? Like this is the type of thing you pull up Bloomberg and you can see in five seconds. Oh, monsters. Oh, I got X% growth and trades at 30x. Celsius has X plus 6% growth and trades for 25x. Why do you think the market is discounting the Celsius story? >> So, I think two main factors. One is like we mentioned that maybe the market is not focusing so much on the newly acquired brand Alani and is focusing more on the core Celsius brand which has only grown about 6% the last year and has continued to do so this quarter. So Celsius is on its own is sort of like a legacy brand now market level type of growth going forward. So maybe the market is pricing that in without focusing too much on the newly acquired brand. And number two might be a terminal value type of problem saying that you know there's a lot of competition in the space. You have a lot of new competitors coming in like Bloom is on the rise. You have update for example the new Kim Kardashian brand that's on the rise. You have ghost with the tie up with KDP. So a lot of incumbents are coming in and maybe like Kirkland Energy also for example applied with label launch which clashed the Celsius stock quite a bit. So this could maybe pose questions on terminal value. We don't believe so and our survey has found strong brand recall like you said every no Celsius today. So we don't think it's a product that's really going to go away in the next 5 years. You think about a consumer discretionary but maybe that's what the market's pricing in. >> Did you want to add anything there? Uh no I think the Jess question is Jess I I you actually hit were hitting on a lot of the things that I wanted to build on. So let's start. I don't think this is the biggest one but the stock did crash uh you know in February March about 15% when Kirkland when Costco/kirkland rolled out you know it it's never hey this is the Celsius knockoff but it is like hey this is Celsius you know back in my college days I like the five hour energies and Kirkland comes out and it was like a five hour energy they just didn't call that. Uh you guys have a interesting rebuttal to the Costco as a barecase thesis. So why don't we just go into that? Again, I don't think that's the biggest bare thesis, but it is the most approximate one. So why don't we start there? >> I agree with you. And you know, when that came out, we in the middle of our pitch, we're like, okay, we got to do some work about this for sure to try and see if we're wrong or not. Um and I think the work we did showed that we on the right track. Uh it's basically this. There's two main reasons why we believe Kirkland Energy is not going to pose a medium to long-term threat. Number one is most consumers typically buy energy drinks as an impulse purchase. 70% about your convenience stores. Like you said, you know, you're driving around, you're going to go to the gym, you have a construction worker heading to work, they pick up an energy drink, they want to have a good you they want to just drink it, get that energy bus, and go on, right? You're not going to order this in bulk. Like, you won't go to Costco and buy this in bulk unless you're a dieh hard fan in general. So, for this to work, you're going to have like, you know, a big change in consumer habits to have to kick in. And number two is if you look at private labels on its own, right? They typically work pretty well for staple products which are very price sensitive in nature like toilet paper for example, package water for example, not so much when brand value is in effect. Um we saw this play out with Kirkland sodas, you know, Coke and Pepsi did do pretty well against it. We also saw this with light beers. So we think that this is going to continue for energy drinks as well. And like you said, if they decide to copy Celsius now and not Monster and Red Bull, then Celsius is on the right path, right? Why would you copy something that's not working? So, >> you know, so on on the one hand, I like I had a push back to that and an agreement with that. So, my push back would be, you know, he he I'm sure can join me. If you're a real energy drink user, you order these things in bulk and you're drinking them. You know, you I I like to have one co if I'm drinking out the can, I like to have it cold in the morning and I'll I'll get an Amazon 24p pack. And moving on for me, like I was reading to prep for this, I was reading them at recent conferences and they talk about, hey, Celsius and Alani, they one of the interesting things about them is they skew much more heavily female, right? And they were talking about Celsius is a millennial target. A lot of times it's a working woman and it's instead of drinking coffee in the morning, you know, she wakes up and they talk about, hey, we overindex to Amazon, right? because the the person buys a 12-pack of Celsius, gets to deliver it, they have it daily in the morning. And when you start thinking about that consumer, whether it's me power chugging these things or the, you know, the more professional working woman, that is somebody who is buying them in bulk. So I I kind of like a monster. I do kind of get a few wrote out bulk monsters. A monster is much more the convenience store. I don't know with Celsius. I I don't know about that. So, I'll pause there because I do have a support for what you said, but I'll pause there on that push back cuz when I was reading it, I kept hearing them say Costco is not a big deal, but a lot of our and they are even pushing back on like credit card data saying hey ignore the credit card data because a lot of our people are ordering from Amazon and when I hear order from Amazon, I am hearing we order in bulk and that Costco is a risk. So, I'll pause there and then I have a positive support. So for sure we do agree that you know compared to other energy things I think Celsius is revenue 10% of that comes from Costco the industry average is five. So you're not incorrect to say that but 10% on its own is still a pretty small number if you look at I mean the entire pie and um number two is just to say that as a habit like usually what we found from our survey also is that this is more impulse in nature and again Celsius and Alani are today still sold at a Costco. So it's not that the customer if they really are brand loyal which is again what our survey said they're not going to pick up another drink because it's going to be cheaper because they want that flavor profile that Celsius gives them and the feel that that Celsius will give them. So that's what we believe will go forward and I think quarter 1's data has shown that growth has not really fallen. Quarter two will be super strong again because this roll out has not happened as much. So I think that will be a great indicator for that thesis per se. >> Yeah. And then on the support side of the piece, I mean to what you're saying, >> there is a long history of private label brands, whether you go back to Sam's Club Coke or, you know, whatever it is, it's just even if you have the exact same flavor, which it's not, but even if it was the exact same flavor, there is something about when you're eating something, when you're consuming and especially drink, uh like beer is another great example, like there there just is something about the brand that the the store club doesn't match. Whereas if it's something, you know, a paper towel is a paper towel whether it's the PNG brand or the Costco brand, you don't even know once it's on the roller, but once on the roller for the most part. So I think history does suggest that hey, these private label brands just with drinks in particular, it's very difficult. And I think you guys did a great job of pointing that out in your rebuttal. Anything else on the Costco risk or the private label risk you want to talk about? Or there's plenty of other things I want to talk about here. >> No, you're spot on. I think he did you want to add something? >> Well, adding some data point uh regarding the energy drink private label brands only have like 0.5% share overall. So yeah uh as we discussed um I think the customer nature is pretty different from other consumer products. So yeah we are comfortable about um so far the private label brands are not a huge risk for our thesis. We've mentioned the proprietary survey that you guys did a few times. And again, I I thought this was great and it it was so interesting reading it and seeing the difference. Why don't we talk I I want to step back and we'll come back to the stock and everything in a second, but why don't we talk a little bit about the proprietary survey you did and I want to talk about all pieces of it. A you know my again the listeners can go see it's page eight of this slide deck. I'll include a link to but what was the proprietary data? What were the learnings and kind of how did you guys let's talk about the methodology. How did you go about structuring this getting it commissioned? all this sort of stuff. So I'd talk about the the whole overview kind of from soup to nuts if that makes sense. >> Yeah. So uh let me talk about the overall um characteristic of the survey. So we run a proprietary survey through the professional research panel called prolific. So uh three findings stood out. First Alani had the highest repurchase score in the entire category. Second Celsius score was probably in line with Monster and Rull. So Celsius is a not a fat brand. This is with the established incumbents on loyalty. And third and this was interesting one but newer brand like blue or ghost show weak loyalty. So their own buyers rate established brand higher. So that tells us entrance in the female segments are struggling to build real loyalty while Alani already has it. Uh we also look at the repeat behavior uh repurchase behavior for Alani new meaningful share of consumers said they expect to buy the brand more often over the next six months. Salesis also showed a positive signs and along although it is already more mature brand than Alani and the another important point from our survey is what consumer do when their favorite energy drink is not available. Uh I think we discussed about this uh but already but this matters because it's tell us whether energy drinks are plant purchase or impulse purchase. The result were very clear and 63% of consumers said they would switch brands and buy their second preference. Another 8% said they would just buy whatever drink is available. So more than 70% of buyers are willing to switch on the spot rather than walk out empty-handed. So the main point is that availability matters a lot and if the product is not in the on the shelf many consumer will not wait and they will switch. So this is why distribution as shelf presence are so important in this category. Strong brand strong brands matter but the brands also need to be available at the moment of purchase. >> So this will bleed into so Celsius for those who don't know is distributed by Pepsi. Monster is distributed by Coke. Well I'll talk about that later but this will kind of bleed into it. You know, I thought it was interesting a, you know, when you're reading it and you read the first the first line in the proprietary survey, which is look how strong the survey says that Celsius and Alani are in terms of uh retention and brand loyalty versus others. You read that and you're like, oh, that that's nirvana for a brand, right? If you're if your brand if your people are more loyal like you grab more sh all the it's just a really great sign. But then I read slide 10 and as Heday mentioned I I'll just kind of round it. If you really break down, you got five different things that people can do. And if you break it down, if somebody goes and their fla their preferred flavor is unavailable, it kind of rounds to 90% of the people are going to buy another energy drink right there and then, and 10% of the people will uh it's actually 12%. 8% of them will go find uh go to another store to find the brand that they want. And that's I mean, that's where you're really talking, right? I'm going across the street to find it. And then 4% of them will skip buying energy drink also. And you guys were using this as um kind of a bullcase. And when I read it, I actually was kind of thinking, oh, this is an example of distribution is much more powerful because, you know, if somebody goes in there saying, I want a Celsius, and there are no Celsius. There are just ghosts and monsters. I'm just picking off top of my head. There's a nine and 10 chance they're going to buy that. So, you know, if I'm a ghost or monster uh brand and I can go to 7-Eleven and say, "Hey, we're going to buy you out, right?" no Celsius for you. We're gonna give you advantage pricing. And 7-Eleven might say, "Oh, but we're gonna lose sales." And they say, "No, the survey says nine out of 10 people are going to eat it and still buy the Monster." So, I was kind of looking at that that as a bare case that, you know, people are less sticky because I just to ramble for one more second. You know, I'm sure we've all gone been with friends, gone to a restaurant, and the friend says, "I want a Diet Coke." And the waitress says, "Oo, I'm sorry, sir. We only have Diet Pepsi. Can I bring you Diet Pepsi?" I will tell you it's way higher than one in 10 friends are saying no. Like it's probably twothirds saying no, one-third saying yes. So, and that was just an example to me of, hey, I don't know if these brands are as strong. So, I rambled a lot. I I'd love to just toss those thoughts over to you because you all said bullcase and I was kind of seeing a barecase there. >> That's a good point and I'm glad you brought that up. So, the reason why we put that as a bull case is to highlight that brand loyalty is super important if all options are available to you. right now through Pepsi's distribution network and our our research found that Pepsi has one of the most penetrated in the US and North America today. So, you're way more likely to find a product that is distributed by them, which is going to be Celsius and Alani on your shelves today. To your example, if a ghost were to go to a 7-Eleven and say, "I want to buy out everything." They're going to be like, "Hey, you know, we have relationships with Monster, Red Bull, and Celsius or like Pepsi." And they're not going to let us do that, right? Because those guys just come and say, "Hey, you know what? We'll give you a better discount. We'll give you a better promo." And this is what we got when we spoke to a current sales rep that used to work at Alani and now works at Monster. So this is their sales strategy in general. Like when they need to move a product or when they want more shelf space, they simply lower prices, put out promos and get that done. So having that distribution is super super important. And like we said um when the main competitors over here which are your ghost or your bloom for example if they are more likely to go to Alani then that's strengthens Alani's own brand standing. Another bare case point is that Alani is just a fad. Hey it was just a fad and they're going to lose to incumbents. The incumbents like Alani almost as much if not more. So that was our thinking on this. >> He did you want to add anything there? Um uh I think Jess explanation is thorough but our point is um uh Celsius has both of the brand and the distribution network. So um uh if you look at the other competitors um uh the someone who has both is pretty rare. So we thought this is the mode. Let's spell off distribution then. So Celsius is distributed by Pepsi and Pepsi and Celsius I I mean they are intertwined. Why? I think in 2025 Pepsi has Rockstar which I don't think it's crazy to say they mismanaged. You know Rockstar was a burgeoning brand in like kind of 2008 to 2012 range if I remember correctly and never took it kind of sold out as soon as Rockstar got it. It never took off and they sold it to Celsius. So Pepsi has a equity investment in Pepsi. They're really tied up. You know there is a parallel. Monster and Coke have had a similar type relationship for a while where Monster is independent but Coke owns a bunch of equity and KO's basically said Monster is our energy portfolio. That's basically where Pepsi and Celsius is. But you know, it does kind of strike you based on my bare case where I say, "Hey, it seems like distribution matters more than brand." Right now, Celsius is their brand. But we're talking about some if you say 20x multiple, right? You kind of need 20 years plus of earnings to just get your money back. 20 years is a long time. Pepsi might change their strategy seven years from now. You know, maybe they want to launch. How do you think about the dynamics and the risks of the Pepsi relationship when you're relying so heavily on that distribution? And like, you know, the last thing I'll say there is if you lose Pepsi, there's Pepsi. Coke's locked up with Monster, so you don't have Coke. There's Cured Dr. Pepper, but they've got ghosts and they don't have great distribution. I think they lean on kind of the Coke and Pepsi distribution a lot. So, if you lose Pepsi, there there's kind of no one else. So, it feels like all the powers over there. How did you all think about that? >> I think you did hit the nail on the head on that. that it is super important for an energy drink plan to have you know that distribution network in place and Pepsi is literally everywhere in North America today. Um why we believe that Pepsi is not going to start its own energy building plant is two main reasons. Number one is when we spoke to an ex Red Bull EVP, he said that, you know, typically innovation is pretty tough to come by by existing legacy brands as a reason for why Red Bull Monster could not capture the market Celsius was in. Um, you know, given it was a duopoly for so long, Celsius became so big, they could have easily copied it. They've tried to like put out products competing against it. They've not done as well because you need that DNA, you need the understanding of consumer, you need the team to be at it in order to get that done. And that's been difficult. Now, similarly, Pepsi and Coca-Cola have also faced the same issues. If you look at what they've done the last 10 years with the soda business going down as much. Coca-Cola's focused a lot more on the acquisitions. Not all have worked out. Some have worked out brilliantly well, but it's all been acquisition focused. It's not been we're going to start our own division or going to start our own thought vertical targeting towards this mainly for this issue. That's what we've noticed and that's why we believe that it's not going to be likely that Pepsi is going to do this. And number two is the equity stake as well. Pepsi has 11% stake in Celsius. So for it to start its own energy drink company would be for it to devalue its own equity stake in this company. Um even though it's easier for them to really lie on saying hey you know we have a great distribution network today. Let's continue backing this product by ensuring it gets everywhere. These guys seem to be doing something correct in they're the largest sugarfree company that that is today in the space. then I don't see a reason why they want to compete against that. >> No, look, I I I certainly hear you though. It's an 11% stake. Let's just round it and say it's worth a billion dollars and Celsius is a $10 billion market cap, right? Like I definitely hear you, but I it does always jump out to me as it's like, hey, they've got the equity stake. They're not incentivized to be. It's like, well, yeah, but would they rather like build their own thing and own a 100% of something or would they rather own 11% of this thing that, you know, they still won't control the brand? And it's just a tough one. Let me go to two other rac. If I go back to earlier in the presentation, you guys, it seems, are really bullish on the Alani acquisition. And you know I I think your bullishness I think a lot of people are worried that Alani it grew and the Pepsi distribution will help them right but I think a lot of people are worried that the growth is it's funny to say this about Celsius because they're a sugar-free company and Alani is a sugar-free I think they're worried it's a sugar high type growth right where they were doing a lot of LTO's limited time only a lot of special flavors maybe a lot of discounting I think people are worried that the growth there is uh temporary it's a sugar Okay. And then the other worry I tack on is Jess, I believe you mentioned, hey, Celsius is kind of hitting the mature phase. And I think a lot of bears would say, hey, you know, Celsius is supposed to be this great growth product. There's still a lot of shares to capture, whether it's domestically or particularly internationally, and they went out and bought Alani. And people generally go do like bolt-on acquisitions, not when there's a lot of growth left on the core product. They kind of do it when the growth is starting to sol and they say, "We need a new vector." So I I think those are the two bare points I'd say on the Alani acquisition. I'll toss that over to you guys to address either way either one in whichever way you want to. >> So just before answering that question, I think um another point that just struck me about the previous topic of conversation was Pepsi did have Lockar, right? So if it did want to grow an energy drink plant, it did have the option to do so, but it chose not to do so and it didn't work well. There you go. So um yeah I think that that's like more enough for maybe the next 5 years. Of course you can't predict the future like you said 20 years out but I think for the next 5 years it is that is the case and monsters multiple has never deflected this this such right like monster has faced the same risk for the last 10 years 15 years never faced that issue so I think it'll be a little unfair just to be less Celsius on that >> if I can add on I mean look I think once or twice and I can't remember I I haven't brushed up on my notes in monster I think once or twice Monster and Coke went to the the brink now coke owns more monster but I think your your real bull point would be both what you said, hey, Pepsi got out of the game. They gave Rockstar over to uh Celsius and then B, Monster and Coke got to the brink and every time both of them came up back to the table and Monster stock has been a rock star to use a interview. So like I even though I look at it and say, hey, it seems like the distribution is way more important. Uh, you know, the brand has been able to pull through here. So, I think there's a, you know, if there was no Monster Coke relationship, I would think this was a much bigger risk, but you had to stress it. Anyway, let's talk. I was hitting on the Alani acquisition, both the sugar high piece of it and the hey, is the Celsius piece start out? I'd love to hear what you all's thoughts are on that. >> Hey, do you want to go first on this? >> Um, Jazz, please go ahead first for me. >> Okay, sure. No worries. Um yeah, basically I think first on the acquisition, if you want to talk about it, I think what Celsius the management realized was that their product like you said was targeting most of the millennial women as well as Gen Z like most of the Gen Z males. They realized there was a big hole in terms of targeting Gen Z women. They realized Alani was the biggest brand in that space and that's a growing sector in Chandville. So I think we had a couple of slides detailing also where growth in sugar-free is coming from and it was this area. So for them to get an asset at $1.8 billion for a brand that then went on to do $1.3 billion of sales the same year was pretty effective use of capital at that point. So it was more of addressing a market that they were not to winning at a market that was going pretty big and recognizing a brand that had potential to go on and supplement its own offerings pretty well. So pretty efficient capital allocation. Um two is on the international growth piece. I think the the company management has also had a lot of messaging about how they want to go about this in a pretty cautious manner. Um international expansion has never been super big per se on their plans. Um recently they did enter into a lot of planning agreements like they are sponsoring the Aston Martin F1 team for example similar to what Red Bull and Monster have been doing. They have distribution agreements in Centoi available out there. Um but it's not going to be super big and I think it's going to be a three to five year forward type of vision given international revenue is only 5% of the business today. So the main focus is going to be the US domestic markets and number three would just be if you look at Celsius on its own right I mean 6% is broadly market level type of growth. Um so they've achieved like you know a standalone brand share of about 10% in the total market. they've got on another brand that is going to continue to grow and they're focusing on more of a portfolio of brands approach rather than a one brand company approach. So that's what we think is going to be the main uh key aspect of this going forward. Yeah. >> Let me switch a little bit. So I I've got two last questions then we can maybe talk international for a second then wrap this up. But you know I was prepping for the this call and reading the tro call and there was one thing in it that just really jumped out to me. somebody it was an analyst who followed consumer for a while and he came out and he said hey the energy drinks right now remind me of protein a few years ago and he mentioned look there were the old incumbents there was uh like insure which your parents you your grandparents when they couldn't eat like that the insured part there was muscle milk which I took a lot of in college I was a big muscle milk guy the cookies and cream flavor and what they said was look they all got disrupted by newcomers and then over the past three years cuz like the pace is accelerating and you know the brand is easier to build than ever with Instagram and influencers all this. The newcomers got disrupted by the new newcomers, right? So, and I I I will just give a brief anecdote. When I was in college, which was 20 years ago, which actually works nicely for the story, I I I worked at a vitamin world. You know, I selling vitamins and and a vitamin world just opened underneath my little shoe box office that that I have in New York City. and I go there, you know, once twice a week to get an energy drink, but when I walk by the protein, I don't recognize 95% of the brands. Right now, 20 years is a long time, but we've mentioned Celsius trading at a 20x multiple. You're you're underwriting 20 plus years of terminal value. And to bring it back to the protocol, they were saying, look, it reminds energy drinks right now remind me of that then. Like you had Red Bull and Monster, and then you had Celsius Gump, but now we've got Elani. Now we've got Ghost. And guess what? There's a lot of brands coming underneath that. Liquid Death is coming out with an energy drink and Liquid Death, you know, if they can sell freaking bottled water in a can. Like, what what can they not sell? You know, Liquid Death's coming out. You guys mentioned Bloom. Uh C4 has been pretty popular. I think that's been around for a while. Uh there's Form, which I thought was a 7-Eleven house brand cuz I only saw it at 7-Eleven. I guess it's an energy brand, but there's a lot of others. And if you go Google, you'll see a lot of others coming up. Bucked Up is out there. There's Bum Energy. I think Bucked Up is Jaco. I don't really know him, but he I think but all these influencers are starting to come out. I think Jake Paul had one. So, I worry that we talked about the distribution mode, but I do worry that there's just a lot of brands coming out here and it's going to get really competitive and that protein thing. Now, protein is a different thing than uh protein is a lot lighter, easier to ship, but a lot easier to put in a small space, but I I really have worries that there's a lot of competition coming. So, again, I rambled a lot. I'd love to hear what y'all's thoughts on that is. >> For sure. So, I think in a nutshell, what you're trying to say is that there's a lot of fads going on right now, right? Is Alani and Celsius just a fad? Um, and I think we did have a slide to cover this because this was this point that we also considered when we were thinking about, hey, should we go short this stock? Because it's just a fad. It could go to zero. 20x is way too high for something like this. Um, but I think we had two main data points that contradicted the fat view that we had. Number one is uh both the Celsius and the Alani brand have reached some sort of escape velocity in terms of revenue. They're both about $ 1.5 billion dollars today. Um no energy drink company has got to that size and has failed, right? All of them have then only gone on to be bigger. Um and I know you're saying that if you look at a forward view perspective, so let's take Prime Energy for example. You mentioned that that was Jake Paul's brand for example. It had a huge upsell. You know, they had insanely loyal customers for a short period of time. They were the number one Google trending brand even above Monster and Deadpool at some point but they fell equally as fast because there was no real market for them and because customers beyond a point like okay you know we tried it once because the influencer told us to not so much anymore. Um these are >> can I It's so funny man because Prime is just like the perfect example where I remember I walked in I was like what is this brand I had no idea and then I I saw I was a Jake Paul and like three weeks later at the CPS it was like buy one get 5,000 free please take all the prime drinks from us. So it is a great example and another one I would just throw on to Bang energy drink you know that that was a big one they uh they did a lot of viral marketing on Instagrams with there was a crazy article uh detailing it you know it was girls in bikinis to sell these things it was very hot for a while it was not sustainable and that's gone but to your point like monster Red Bull and probably Celsius once you kind of hit over a billion dollars it's probably sustainable so I'm sorry for interrupting please continue >> you're spot on with that that you know u so the The core aspects for this is like you said, it's pretty easy to get a lot of traction early on. But what differentiates a fad from like actual loyalty is continuous repeat customer purchase without spending marketing dollars on that. Right? Um now we're seeing early signs of that. Like this quarter for example, SGNA as a percentage of revenue has fallen by about 500 pips for the company. So they're not throwing money at marketing to get the sales that they're getting to right now. um the loyalty survey thing that we did, right? It shows that hey, customers really want to buy this product and increased frequency was what they indicated saying that hey, you know what, we're going to continue buying this product. You won't really do that for something that's just a fad or when you have so many options available, they may say, hey, you know what, you want to try something else or maybe there is an alternative flavor you're going to try or things like that. There was not a lot of negative sentiment per se, especially towards Alani. So that's why we thought that this brand has proven to be, you know, a company that has come up from a community base of just how they they're building themselves. They've always put community first. A lot of their phone flavor offerings also, for example, have come out from the community itself. So the cotton candy flavor, which is one of Alani's top selling SKUs, came up from the community because a lot of people were just commenting on Tik Tok saying, "Hey, you know what? Let's cotton candy." They put that to the test and they've actually gone about to do it. So they focus time on community building. They have enough scale. The Pepsi distribution is going to get them into more places as such. And that's why we think this one is not going to be a fad in general, but is going to be one of the companies to stay quite a bit. So yeah, >> I asked this as my my fellow energy brethren. Do you like Celsius or Alani? >> Well, I'm almost I'm almost addicted to Celsius and Alani. And uh I'm really jealous because uh I'm from Japan and so far Celsius and Alani are not available in Japan. So I'm waiting for their international expansion. >> Look, one of the bull cases for Celsius is 5% international sales. The monsters at 40. So you're you're just uh laying out why the the bullcase exists. I don't know. Like the one thing is Alani and Celsius are their flavor profile is so different than everything else on the market. You know, Alani is really effing sweet and Celsius it's like uh I I don't even know how to describe the flavor. It's weird fruit flavors for the most part. They're very strange. I'm I'm not a big fan compared to all of them, but I just think it's interesting how a ghost versus a rain versus a monster. I I I couldn't really tell the difference. I I hate Red Bull. I could obviously tell the difference if I drink Red Bull, but when I drink a Celsius or a Lani, like there's something about it. I I would instantly know that it was that. So, I don't know. It's probably neither here nor there for the stock, but it's interesting. Last question. Let's talk valuation real quick. Uh this is a I call the 10. It's actually I think a 7 and a half billion market cap right now. EV rounds to about 10 billion. You know, I I I'm just looking uh if you forward estimates are probably high to high singledigit to low singledigit revenue growth. You know, I'm looking at Bloomberg. They've got $2 per share of EPS in 2027. So on a $30 stock, that's like two year Ford out. Let's just call it 15 times EPS. It's not expensive. That's cheaper than the market multiple. But also I you know when I look at those numbers and I I talk about the distribution risk from Pepsi that might rear its head at some point. I talk about the market is getting competitive risk the risk with the particularly the Alani fad risk. You know it's not screaming at me hey this is smashing me in the face alpha opportunity. So I'd love to just ask you guys how do you guys think about valuation here? >> Yeah. Okay. So I think um interesting point on the consensus numbers and I think a lot of the consensus numbers are going to change given how the next couple of quarters are going to be because there's going to be an effect of how they're going to take in the Alani acquisition in terms of how that's coming along. It's going to be an effect of the private label like you said the biggest risk that they're facing. Is that really working? Is that really not? So I think there a lot of triggers or catalyst that can really push the stock upwards or can change the earnings estimates as such. Um if you to look at how we've gone out to build our model, we basically said hey operating margin to expand by about 200 bips over the next 3 years. Um sales going to grow by about 18% gag over the next three years mainly led by Alani. Uh we all think those numbers are pretty insane and like okay one quarter is only gone by but Alani has met that number so has Celsius. Um and then we get like a scenario which is I think 2.6 in terms of where the 28 number is going to be at the 27 number. was slightly higher. But that's basically how we've done it more in terms of like a fundamental approach. And then we're like, okay, if you were to give it the multiple it had before the Kirkland associated crash, it would then give you the what we had of 25%. um that now that multiple I guess is pretty much everything saying okay you know why would that company get the multiple and I think that's when the bull case starts to come in saying you know if 3 years down the line this company is going to have about 4 to5 billion of total sales it can then start looking at international expansion and then is where the monster story starts kicking in in our opinion saying hey you know monster went from about 5 to 10% international to 40% in 10 years can this company also do the same thing um pretty much so I I don't see any reason why like Asia is a very low hanging fruit about that. Like EJ said, Japan loves energy drinks. A lot of the Asian countries do a great avenue to enter over there. The flavor profiles are pretty similar. Um so it's just a matter of finding the right distribution partner and I think that's where we came from per se. Um so yeah, it's basically divergence from these estimate numbers is where we're coming from. No, in many ways, look, I I think you guys I I mean, this is a one stock pitch, but in many ways, I think the more interesting thing about Celsius, and I'll remind everyone nothing on this podcast investing advice, but it's almost the arbitrage point out, right? Like, hey, this is trading at, let's just say 20 20 times PE and Coke, which is much slower growth, is trading and probably, you know, GLP1 sugar head wins. It may be a sugar. I mean, I'd love it if we taxed the sugar in the future, but you know, Coke is forecasting 8% for growth. So, Coke trades at a bigger multiple and it's growing slow. Now, Coke also has the Lindy effect of 100 years of the Coke brand and international, but Maser, you know, I I think it's got a similar revenue estimate growth and it's trading for 35 times P and Celsius again trading at 20. So, like even if you said, "Hey, Andrew, I'm with you. There are distribution worries here. There's comp competition." Well, guess what? the competition concerns play double for Monster because Monster's got more of the market. So if this is fragmenting and you know monster is probably a little less it as I said it t monster and rain tastes the same now monster and rain are owned by the same people but monster might be a little less differentiating in Celsius so the competition concerns might hit them harder like to me like it makes sense long thesis but almost it's unfortunate you can push like the long short side of it you know because it seems like in the basket or KDB is a completely different animal but uh let's see yeah I think we cover that anything else on valuation you would talk Well, >> I think I think you hit the nail on the relative part, right? I mean, I spoke a little bit more on the insensic part where we came from, but yeah, relative scale 20 XP. If you look at just the broader market, like we said, right? Yeah, you have this, but so does the broader market in general today, especially at these valuations. Um, even if you were to let's say discount growth a little bit, you look at the operating margin expansion component, you're still looking at a double-digit earnings type of profile of 12 15%. um at a lower than market multiple which is still pretty fair. So it's still a unique opportunity to enter this company definitely. >> Perfect. Perfect. Well guys look I unless you have anything else you want to talk about I think we can go ahead and wrap it up here but uh anything else we should have hit or anything from your side? >> Nothing from me. >> Well look a I want to tell you guys congrats again. I I I've said it in some of the other pods, but every judge has told me this is by far the best set of uh entrance just from the both the finalist, but even before the finalist. So, uh congratulations on and third place. I mean, that's awesome. So, congratulations on that. Thank you guys so much for coming on. Again, I'll include a link in the show notes to their deck, which I keep looking over here at their deck and everything in the show notes, and we'll have some contact info in there if anybody wants to reach out and anything. But Jos Eiday, this has been awesome. Thank you guys so much for coming on and we'll talk soon. >> Thank you, Andrew. Appreciate it. >> Thank you so much, Andrew. >> A quick disclaimer, nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial adviser. Thanks.