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Shares of Celsius (NASDAQ:CELH) stock are fizzing higher after the energy drink company announced that its Board of Directors had approved a 3-for-1 stock split. Shareholders as of the close of business on Nov. 13 will receive two additional shares for each share held on that date. Afterwards, Celsius expects shares to begin trading on a split-adjusted basis beginning at the market open on Nov. 15. This action will not affect equity ownership, as the price of CELH stock will be divided by three following the stock split.
The timing of the stock split announcement is interesting, as Celsius has confirmed that it will report its third-quarter earnings on Nov. 7. In many circumstances, companies will announce stock splits concurrently with their earnings. Celsius announcing a stock split before its earnings has led some shareholders to speculate that it will report an impressive quarter.
CELH Stock: Celsius to Initiate 3-for-1 Stock Split on Nov. 13
The rationale here is that Celsius would not announce a stock split before its earnings if it foresaw that shareholders may react negatively. In the event of poor earnings, the price of CELH stock could fall even more, which, paired with a stock split, would result in an even lower price.
Celsius also has the backing of a major food and beverage powerhouse: PepsiCo (NASDAQ:PEP). In August 2022, the two companies signed a major distribution deal that would see Pepsi become Celsius’ preferred distribution partner. In exchange, Pepsi agreed to invest $550 million into Celsius’ convertible preferred stock, representing an 8.5% ownership stake on an as-converted basis. Since the deal was signed, CELH stock is up by over 90%.
For the third quarter, analysts expect Celsius to report revenue of $352 million, which would imply impressive year-over-year (YOY) growth of 86.79%. Importantly, the company is also expected to be profitable for a third consecutive quarter, as analysts are forecasting a GAAP EPS of 51 cents and an adjusted EPS of 47 cents.
For guidance, analysts expect fourth-quarter revenue of $320 million — signaling 79.96% YOY growth — and an adjusted EPS of 39 cents.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.