To The Moon

$Celsius Holdings, Inc.(CELH)$

Today, we're diving into Celsius ($CELH), which just released its fourth-quarter earnings report alongside a game-changing acquisition of Alani Nu. This news sent shares soaring by nearly 30%, possibly fueled by the stock’s high short interest of over 20%.

Many short sellers had been betting on Celsius as a declining brand, only to be caught off guard by this bold move—acquiring a rapidly growing company like Alani Nu. Now, what does this acquisition mean for Celsius?

This is a significant deal, considering that Celsius, before the stock jump, was valued at around $5 billion. Purchasing Alani Nu for approximately $2 billion represents a major shift. In this articles, I'll break down:

• What Alani Nu is

• The potential impact on Celsius

• My long-term outlook for the company

• How this acquisition alters the risk profile

• My personal investment journey with Celsius

If you enjoy educational investment content, don’t forget to like this articles and subscribe. Now, let’s dive into the details.

The Alani Nu Acquisition: Key Details

Celsius is acquiring Alani Nu for roughly $1.7 billion, valuing the deal at around 12x EBITDA. To finance the acquisition, Celsius is taking on just under $1 billion in debt while also using some of its existing cash reserves. This is a transformative move.

Currently, Celsius generates about $1.4 billion in annual sales, but when combined with Alani Nu, that figure jumps to approximately $2 billion. EBITDA is also expected to rise from $256 million to nearly $400 million. Investors are excited about this deal, primarily because it is expected to be immediately accretive—meaning it will boost earnings per share (EPS) within the first year.

Why Investors Love This Deal

The deal structure appears highly favorable:

• Attractive Valuation – Alani Nu was acquired at under 3x revenue and 12x EBITDA, which is relatively reasonable for a fast-growing company.

• Strategic Alignment – While Celsius targets a broader audience with a fitness focus, Alani Nu appeals specifically to young women with an emphasis on wellness and empowerment. This diversification reduces overlap and expands Celsius' market reach.

• Explosive Growth Potential – Celsius’ retail sales grew 22% last year, while Alani Nu surged 64%, making it one of the fastest-growing brands in the energy drink category.

• Industry Landscape – The dominant players, Red Bull and Monster, are growing at about 5% and flat to slightly negative, respectively. This acquisition positions Celsius as a stronger No. 3 contender, now holding around 16% of the market share in an industry expected to grow 5-10% annually.

Financial Outlook and Potential Upside

Management expects about $50 million in synergies from this deal, bringing the combined entity’s 2024 EBITDA to approximately $400 million. Long-term, Celsius aims for EBITDA margins similar to Monster (30-35%), but even assuming 25-35% margins, the upside is significant.

Looking ahead to 2025, if revenue grows to $2.3 billion at a 25% EBITDA margin, EBITDA could reach $575 million. After factoring in interest and taxes, free cash flow might be around $400 million.

What Could This Mean for the Stock?

With the stock currently trading around $85 per share, Celsius' market cap sits near $8.5 billion. At 20x free cash flow, this valuation isn’t excessive, especially if growth continues. If the acquisition drives a revaluation—pushing free cash flow toward $800 million over the next five years—this stock could see substantial upside.

This deal could be a game changer, but execution will be key. If Celsius successfully integrates Alani Nu and accelerates growth, the stock could be significantly undervalued at current levels.

I found this to be an invaluable educational resource. It helped me structure my research process, analyze companies effectively, and, most importantly, focus on what truly matters—developing a deep understanding of my investment checklist. No course, book, or other resource has been as valuable as having access to this level of research on currently relevant companies.

For context, I’ve previously mentioned Celsius a few times. It was initially a small position for me—around 1% of my portfolio. The majority of my thesis wasn’t based on my usual checklist but rather on a special situation: rapid growth combined with Pepsi being a key stakeholder, potentially setting a floor for the stock price.

Earlier this week, on Tuesday at around 11 AM, I sent an email to my subscribers announcing that I had doubled my position in Celsius at around $22 per share. This move increased my position to approximately 2.5% of my portfolio. My reasoning wasn’t based on Alani Nu, a competitor I wasn’t entirely convinced about, but rather on Pepsi’s strategic investment in Celsius in 2022, which effectively valued the stock at $25 per share. Seeing it trade below that level made me think it could serve as a valuation floor.

As I mentioned to my subscribers, my perspective was: Heads, I win; tails, I don’t lose much. If Celsius maintained its market share and improved margins as projected, it could potentially yield a 7% annual return, in line with the market’s growth. But there was also the upside potential—if growth was reinvigorated, or if Pepsi increased its involvement, the stock could see gains of 100–200% over five years. That was my framework for increasing my position.

However, I considered this a speculative bet rather than a high-conviction investment. It didn’t fully align with my investment checklist, but the special situation made it an interesting opportunity. Unfortunately, Celsius’s core results in 2024 have been disappointing. Year-to-date, revenue has grown only 3%, despite volume increasing by nearly 20%. This suggests that while distributors and retailers are benefiting, Celsius itself isn’t capturing the upside. Initially, the company attributed this to Pepsi’s inventory rebalancing, but by Q4, that explanation was less emphasized, and they still reported a -4% revenue decline.

This trend contradicts the original growth thesis that I had considered, where I expected sustained 10–15% annual growth. Seeing that growth slow significantly in 2024 has become a growing red flag for me. EBITDA has also declined, despite the company settling a significant lawsuit.

I don’t believe these weak results are driving the stock’s recent surge. Instead, it seems to be fueled by excitement over Alani Nu, which has become the “hot new thing” in the energy drink space—much like Celsius was before. This makes me question whether Alani Nu itself might experience a similar decline in the future when another trendy brand emerges.

Looking at my investment checklist:

• Aligned management: I prefer founder-led companies with significant insider ownership. While Celsius’s CEO has done a great job growing the business, it doesn’t strongly stand out in this area.

• Compelling valuation: At 20x free cash flow, it depends entirely on execution—whether they can integrate Alani Nu successfully and achieve the projected $50 million in synergies.

• Obvious growth potential: This is where Celsius fails my checklist. Previously, I saw clear growth potential, but given the recent revenue slowdown, that’s no longer obvious. It’s possible I’m being impatient and that growth could pick up again, but I prefer investing in high-probability opportunities.

As a result, I have fully exited my Celsius position. This morning, I notified my Unrivaled Investing subscribers that I sold my shares at around $33. This resulted in a slight overall gain. My earlier purchases were at a loss, but my recent buy earlier this week—when the stock was in the low $20s—offset that and brought me to a net gain.

This wasn’t a home run investment. It doesn’t fit my typical approach, where I look for long-term compounders that I can hold through market fluctuations. Instead, it was a special situation, and while I do make room for these, they tend to be hit-or-miss. Some work out extremely well—like when I invested in HIMs stock warrants before it took off—but they are riskier by nature.

Ultimately, most of my portfolio is focused on low-turnover investments—companies where I trust the management, see clear growth potential, and feel confident that the business will be much larger in the future. In several of my holdings, the CEO owns 40% of the company, which ensures strong alignment between leadership and shareholders.

At this point, I’ve covered Celsius extensively. It’s possible that strong execution could lead to further growth, potentially doubling the stock over five years. If their margins improve and Pepsi sees more strategic value, an acquisition could still be on the table. However, with the Alani Nu founders now holding a similar stake as Pepsi, it’s unclear whether this deal makes an acquisition more likely.

For me, I’d rather focus my attention on investments where I have high conviction and see a clear long-term upside. I’ll continue to explore special situations, and I’m currently looking at one with 5–10x potential, but my primary focus remains on strong compounders.

I hope this breakdown of Celsius’s acquisition and my investment approach has been helpful. If you have any thoughts, I’d love to hear them in the comments! Thanks for tuning in.

@Daily_Discussion @TigerPM @TigerObserver @Tiger_comments @TigerClub

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.