Celsius Holdings (CELH) posted a revenue beat this morning that the market needed to see. Revenue rose 16.8% year over year to $847.2 million, beating the Street estimate of about $800 million. The stock jumped roughly 7% premarket. The beat is real. The problem is what had to happen to produce it.
Who Actually Won the Quarter
Rockstar Energy contributed $80.3 million, while CELSIUS brand revenue fell about 6% due to inventory rebalancing, club-channel softness and SKU optimization. Strip those out and the quarter belongs entirely to Alani Nu. Alani Nu delivered its biggest quarter ever, with net sales of approximately $410 million, up approximately 24% year over year and accelerating from Q2. A single limited-time flavor, Witch’s Brew, did most of the heavy lifting: it produced more than $130 million in retail sales across traditional and club channels. Even excluding that promotion, core Alani Nu retail sales in tracked channels grew approximately 50% year over year.
That is genuine consumer pull. Alani Nu’s share of the energy drink category in tracked channels reached approximately 9.8% in the quarter, up nearly 3 points year over year. The brand is not borrowing demand. It is taking shelf.
The Margin Problem Is Not Going Away
Here is where the analysis gets uncomfortable. Profitability was mixed: GAAP net income rose sharply, but gross margin fell about 450 basis points and adjusted EBITDA declined 3%. Gross margin dropped to 46.8% from 51.3% a year ago, driven by a higher mix of DSD sales and increased commodity costs, primarily aluminum and fuel. That is not a one-quarter quirk. The higher mix of DSD versus direct sales results in higher trade investments and billbacks that reduce reported net revenue, meaning the volume gains Alani Nu is posting come with a structural cost. Management guided for gross margin in the high 40s, dependent on commodity fluctuations.
The path to management’s low-50% gross margin target depends on aluminum costs easing and the DSD system maturing. Neither is guaranteed heading into 2027.
The commodity and distribution pressures compressing CELSIUS margins are not unique to one brand. Red Bull’s leadership transition signals how the category’s largest player is repositioning its own distribution and cost structure.
Valuation: The Gap Is Wide, But the Route There Is Narrow
The stock’s GF Value was recently shown around $78, compared to a current price near $30, trading roughly 60% below that estimate. Based on one-year price targets from 21 analysts, the average target for CELH is about $41.10, with a high estimate of $64 and a low of $26. The dispersion alone signals how much the gross margin trajectory matters: bulls are pricing a commodity tailwind and DSD integration gains; bears are pricing a company that cannot hold the flagship brand’s shelf space while running a three-brand distribution operation.
The company is finalizing selected international markets for Alani Nu launches in 2027 and expects non-U.S. markets to account for more than 15% of total revenue over the next five years, which adds an optionality layer the current price does not reflect.
International expansion into new markets carries its own demand risk. Heineken’s experience shows how quickly consumer softness in new geographies can undercut volume-driven growth strategies for beverage brands.
What Traders Watch Next
CELSIUS brand recovery is the linchpin. The company established three dedicated business units: CELSIUS, Alani Nu, and Rockstar Energy and Emerging Growth, and is seeking a dedicated president for Alani Nu to strengthen brand-specific growth strategy. Operational separation is the right call, but it also means the original brand can no longer free-ride on group momentum. Watch Q4 CELSIUS scan data for a stabilization signal. Without it, the valuation discount stays wide regardless of what Alani Nu does.
