Celsius Holdings shares tumbled on Thursday, losing more than 6% of their value in afternoon trading after Texas authorities announced an investigation into the company's marketing of Alani Nu energy drinks. The probe, led by Texas Attorney General Ken Paxton, focuses on whether the brand's advertising misled consumers regarding the safety of the beverages for children and teenagers.
By 2:00 p.m. EDT, Celsius stock was trading at $27.98, down 6.8% from Wednesday's close of $30.01. The stock opened at $30.16 but quickly fell, with more than 11 million shares changing hands. The decline pushed the stock near its 52-week low, as investors reacted to the fresh legal and regulatory headwinds.
Alani Nu has become a critical component of Celsius's growth strategy, alongside the Rockstar brand, as the company works to stabilize its core Celsius line and leverage PepsiCo's distribution network. The Texas investigation threatens to undermine that strategy by raising questions about product safety and marketing practices.
Paxton's office stated that it is examining Celsius and Alani Nu for potential violations of the Texas Deceptive Trade Practices Act, which prohibits misleading sales tactics. The office highlighted that each 12-ounce can of Alani Nu contains 200 milligrams of caffeine and expressed concern that the packaging and branding may be targeting younger consumers.
The investigation follows a legal case in South Texas linked to the reported death of a 17-year-old who allegedly consumed Alani Nu. The area distributor has denied responsibility and is seeking dismissal of the case. Celsius was not named as a defendant. The company has stated that it takes product safety seriously and does not market or provide samples to individuals under 18.
Despite the legal cloud, Celsius has been reporting strong financial results. In a filing for the Deutsche Bank Global Consumer Conference, the company disclosed first-quarter revenue of $782.6 million, a 138% increase year-over-year, driven by the acquisitions of Alani Nu and Rockstar. Celsius now holds a 20.9% share of U.S. tracked energy-drink sales.
CEO John Fieldly told investors this week that the company is experiencing exciting times, noting that one in five energy drinks sold in the U.S. is now from Celsius Holdings. He added that the company has completed its first full quarter managing its brands alongside PepsiCo. Fieldly also indicated that the Celsius brand is expected to see stability over the next several months before resuming growth.
CFO Jarrod Langhans reported that Alani Nu's distribution has expanded and that dollar velocity, a measure of sales per store, has increased from January to April. He noted that Alani Nu's ACV, a retail-weighted metric for store reach, has moved into the low 90s, indicating strong market penetration.
The Texas probe introduces a new layer of risk for Celsius. Investors face the possibility that the investigation could lead to label changes, marketing restrictions, or retailer hesitation, potentially slowing the company's momentum. Even if no enforcement action is taken, the probe may limit the market's willingness to credit Celsius for Alani Nu's growth until the legal and reputational uncertainties are resolved.
Management has stated that most integration work is on track. The company's investor materials show that Alani Nu integration is complete, with approximately $50 million in synergies achieved. Rockstar integration is expected to be finished in the first half of 2026. Meanwhile, the broader energy-drink sector showed mixed performance, with Monster Beverage flat to up and PepsiCo slightly lower, suggesting that Celsius's decline was company-specific.
