|Keep an Eye on Celsius' Second Quarter Earnings|
|By Vinny Cassano|
|Tuesday, 03 August 2010 00:02|
Long term shareholders of Celsius Holdings have had little to get excited about over the past few months, aside from taking advantage of a dip in share price that saw the stock trading for about a buck fifty not too long ago.While dips in the share price of a company usually doesn't make anyone other than shorts happy, patient shareholders with outlooks of longer than a week or two are often more than willing to jump at the chance to add to their positions in such a situation. Personally, I was more than willing to accumulate additional shares for below the two dollar mark.
There's certainly no guarantee that the sales numbers for the recently completed second quarter will show significant enough growth to justify the rapid accumulation of shares by any shareholder over the past few months, but it's my opinion that this stock has been oversold and hammered down with the help of a coordinated attack by game-players who have nothing but a whole lot of time on their hands. Without a doubt these 'players' have a significant amount of money riding on the success and/or short term failure of Celsius, judging by how much time and effort is put into creating an aura of negativity around the stock in cyber space. These whole-hearted efforts include the spread of outdated or irrelevant facts, misinformation, misleading information and sometimes straight-up lies.
That said, the longs shouldn't complain too much because little has changed regarding the potential for the company over the past couple of months, and the risk/reward moving forward looks a whole lot better while the stock is trading for two bucks vice five.
Again, the potential is still there - regardless of how disappointing the first quarter sales numbers were to many investors.
However, potential alone will not raise the price of the CELH stock without a solid increase in earnings for the second quarter, in my opinion; the pivotal second quarter.
With sales slightly declining during the first quarter - due, in part, to the amount of 'freebies' handed out by the company - investors will be looking for very significant growth to match the revised expectations issued earlier this year that have Celsius raking in between $18 and $22 million for 2010.
If the numbers don't match up to expectations, then speculation could be rampant that Celsius will need to raise additional funds this year to keep the business moving. Granted, since Carl DeSantis has come on board he's been more than willing to be the financial heartbeat of Del Ray, but if expenses keep rising at a quicker pace than sales, many shareholders could bail ship no matter how favorable the DeSantis deals may look. Any exodus of existing shareholders would give the 'players' the ammunition they need to 'play' the stock even further to the downside.
That is why this quarter is pivotal - maybe the most pivotal to date for the company. High expectations are in place, due to the issuance of guidance and increased marketing efforts, and the numbers need to show some life after the relatively stagnant first quarter report.
There hasn't been too much noise from the company of late, but there's no doubt that the Celsius calorie burning beverage has the potential to make a dent in the healthy-beverage market. As the newly health-consious America moves away from sugary drinks, the five Celsius sparkling and two green tea flavors should be able to make a splash.
Keep an eye on the Celsius second quarter numbers, due out soon.
Disclosure: Long CELH
Vinny also authors the popular stock investing blog VFC's Stock House.