Shares of energy drink company Celsius Holdings (NASDAQ: CELH) were down 15% this week, as of 12:45 p.m. ET on Friday, according to data provided by S&P Global Market Intelligence. By comparison, the S&P 500 was only down 3% so far this week, so Celsius’ underperformance over this time period stands out. But I don’t believe it’s something for investors to worry about.
Celsius didn’t report news this week. Nothing fundamentally changed with the industry. And there weren’t any filings with the Securities and Exchange Commission (SEC). Therefore, in the absence of any news whatsoever, investors can chalk up Celsius’ bad week to normal stock market volatility.
Volatility is to be expected with a high-growth company such as Celsius. The chart below shows that over the last five years, Celsius stock has dipped 25% or more eight different times, including right now.
This is part of the reason that the Motley Fool recommends having a long-term mindset, investing with five years or so in mind. Over a short term, like a week in Celsius’ case, returns are unpredictable. However, targeting long-term returns and holding through volatility — other Motley Fool principles — will yield better results.
For Celsius specifically, shares are up more than 5,000% in the last five years, up 135% in the past year, and up 26% year to date even after its bad week this week. With red-hot returns like this, the pullback is quite insignificant.
There’s good reason to keep holding Celsius stock through the current pullback. The company just hit $1.3 billion in annual revenue after more than doubling its business in 2023. And this year, it has its sights set on international expansion, which is a multibillion-dollar business for larger competitor Monster Beverage.
Celsius is still poised to create long-term shareholder value. But as this week reminds investors, it could be a bumpy ride at times.
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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Celsius and Monster Beverage. The Motley Fool has a disclosure policy.
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