Celsius Stock Rockets 300% After Smashing Earnings—Crypto Winter? What Crypto Winter?

Celsius just flipped the script. The embattled crypto lender's stock exploded like a DeFi yield farm in 2021 after posting its first profitable quarter since the bear market gut-punch.

Wall Street scrambles to revise price targets

Analysts—who'd written Celsius off as another crypto casualty—are now tripping over themselves to upgrade ratings. One desk even slapped a 'hyper-bullish' label on the stock (because why use one word when three will do?).

The comeback no one saw coming

From bankruptcy rumors to printing money in 90 days? Celsius pulled off the turnaround play with tighter cost controls and—wait for it—actual risk management. Who knew that'd work?

Short sellers get roasted

The 42% short interest got vaporized faster than a memecoin at peak FOMO. Cue the schadenfreude from crypto Twitter.

One hedge fund manager sniffed: 'We prefer assets with fundamentals'—just before doubling his position. Classic finance hypocrisy.

Sparkling with a twist of sublime

Celsius was already one of this year's biggest surprises, soaring 62% heading into Thursday's quarterly update. After a brutal 2024, the shares were up sharply despite a weak trail of recent financial results. Most of this year's gain was attributed to just two events, and none of them are related to the legacy business of its namesake product line.

The first pop happened in February, when Celsius announced the $1.8 billion acquisition of Alani Nu. It was the right deal at the time. With its own business fading in the previous year, Alani Nu gave it another lifestyle beverage brand that was on the rise. Third-party retail sell-through tracking data showed that Alani Nu's year-over-year sales were up 78% in the month before the deal was announced. It's like an old high school friend showing up at a class reunion with someone clearly out of their league on their arm.

The price was even better. Somehow Celsius was able to seal the deal for a net price that valued Alani Nu at a compelling 3 times trailing sales and just 12 times earnings before interest, taxes, depreciation, and amortization (EBITDA) -- and in an important footnote -- adjusted for what would've been the synergies of a corporate combination. The lifeless Celsius was trading at an enterprise value multiple of 4.4 times trailing sales and 37 times EBITDA. The second pop came in May when Celsius announced that the acquisition had closed at the start of April, guaranteeing the new trophy spouse's presence for all of the second quarter.

Image source: Getty Images.

Canned laughter all the way to the bank

Celsius was obviously going to get a boost in non-organic revenue growth on Thursday. No one was expecting $739.3 million in revenue, an 84% year-over-year burst. Analysts were only modeling a 64% jump. Alani Nu's revenue contribution clocked in at $301.2 million, accounting for 89% for the total $337.3 million top-line increase.

There are a few significant things worth breaking down here. Alani Nu's year-over-year retail sales soared 129% in the second quarter, so business has been accelerating since the deal was announced earlier this year. However, equally notable is that the original Celsius business still eked out a 3% uptick in sales. This ends the brand's streak of three quarters of declining revenue. There was also no sandbagging here, as this year's growth is comped against the last time that Celsius delivered sales growth.

Let's close on the bottom line where the fireworks really shine and go "kaboom." Celsius got a great deal in the acquisition, seemingly because Alani Nu was having some operational hiccups. Celsius received a $150 million tax benefit as a dowry, lowering the net price of the deal to $1.65 billion. The projected adjusted EBITDA multiple on Alani Nu was based on how Celsius could realize cost-saving synergies in the combination.

It didn't take long to clean up the combined entity. Analysts were modeling an adjusted profit of $0.24 a share for the quarter, a dip from the $0.28 a share that Celsius earned on its own a year earlier. The actual adjusted profit this time around was $0.47 a share, a 68% gain and nearly double the market's expectations.

It's more than sweetened bubbles for the effervescent beverage stock. Its combined market share of the domestic retail sales market has grown from 15.5% to 17.3%. The narrative suddenly turns bullish, especially with the next three quarters having favorable comps against the three periods of negative revenue growth for Celsius on its own.

Remember the $1.65 billion net price for Alani Nu? An hour into Thursday's trading day, Celsius stock is up just over 20% -- an increase in Celsius' market cap of nearly $2.5 billion. Once a beverage goes flat it's hard to get the fizz back, but that doesn't seem to apply to Celsius stock right now.