Monster Earnings Miss — And Create Buy-In
Earnings per share missed expectations, sales were pumped via promotion, and a series of expenses resulting from changes to distribution, lobbying and other legal costs resulting in a brief after-hours roller coaster ride for Monster Beverage Corp stock, but buyers took advantage of the dip to send the price right back up this morning.
Following a close of $63.47 per share – up 20 percent since Jan 1. — after hours trades had it off more than $3. But at the opening bell, the stock soared past $65 per share.
Revenue was $723.9 million for the quarter, but was also recalculated due to heavily increased promotion to about $630.9 million.
Analysts reacted differently to the news of the company’s earnings miss: Morgan Stanley analyst Dara Mohsenian maintained an overweight rating for the stock, J.P. Morgan raised its estimates to $70 per share, while Stifel Nicolaus cut its expectations by $2 to $68.
Monster CEO Rodney Sacks delineated a few costs that weighed on shares, including a $5 million charge for professional services. Monster, like competitors Red Bull and Rockstar, has begun to step up lobbying efforts in light of ongoing pressure from politicians over their marketing practices. The company has also been wrestling in court with both the city of San Francisco and the family of Anais Fournier, among others.
Additionally, Sacks revealed that the company had paid about $2 million to distributors in the wake of changes to its network. The most notable change in recent months has been its April move of its business from John C. Lenore to a pair of San Diego Anheuser-Busch affiliates.