(Bloomberg) — Short sellers that bet against Celsius Holdings Inc.’s fortunes before their planned acquisition of rival Alani Nu are now seeing hundreds of millions in losses.
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The energy-drink company announced Thursday it will buy Alani Nu for $1.8 billion. Its shares surged to as much as 35% Friday, its biggest intraday rise since May 2020.
That’s left short sellers, which held about 23% of Celsius’ float, looking at paper losses of about $250 million on Friday, data from analytics firm S3 Partners showed.
“We expect a reversal of the recent short selling we had seen in the stock and the new accelerated short covering to help boost its stock price along with the long buying we are seeing in the market,” said Ihor Dusaniwsky, S3’s managing director of predictive analytics.
The deal is seen as a way for Celsius to counter its waning growth. Together, the two brands will hold roughly 16% of the energy-drink market share, Celsius Chief Executive Officer John Fieldly said on a call Thursday. Alani Nu is “almost where Celsius was two years ago” in its growth cycle, he said.
Not all analysts are convinced. Both brands target young female consumers with their sugar-free, health-focused marketing strategies. “If Alani Nu is cannibalizing Celsius’ sales, then the combined entity will grow at a much slower pace,” TD Cowen analyst Robert Moskow said in a note.
Moskow, who rates Celsius hold, also questioned whether consumer loyalty for a social media-driven company like Alani Nu would be as strong as Celsius management believes.
With the energy-drink sector’s growth slowing, drink makers may launch more flavors and promotions to stay competitive, further slowing sales growth and profitability, Truist analyst Bill Chappell said in a note. Chappell also has a hold rating on Celsius.
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