Monster Beverages Plummets on Legal Woes and Missed Earnings

Michael Teague |

Shares for Monster Beverages (MNST) had dropped more than 7 percent on Thursday to as low as $50.75, after the company’s earnings report released during afterhours the previous day provided a bleak outlook.

The incredibly popular and seemingly ever-expanding energy drink brand based in Corona, California posted net income of $63.5 million, or $0.37 per share on revenue of $482.4 million, compared to the prior year period during which the company netted $76.1 million, or $0.41 per share on revenue of $454.6 million.

While revenue was up, the numbers fell well short of expectations that saw Monster making $0.46 per share on revenue of $502.2 million. Shares had immediately dropped 14 percent during afterhours trading in response.

While the company tried to highlight sales growth, there was simply no getting around the costs from the ongoing controversy over the safety of its beverages, no less those of its competitors in the energy drink business.

Earlier in the week, San Francisco city attorney Dennis Herrera filed suit against the company for deliberately targeting young people in its advertising campaigns, despite considerable evidence that people of this age group are particularly susceptible to health problems resulting from the consumption of beverages filled to the brim with caffeine and other common energy drink ingredients such as taurine

The suit comes on the heels of an FDA investigation last year into whether or not Monster’s beverages had anything to do with five different deaths, including a 14-year-old Maryland girl who died from heart complications after consuming the drink two days consecutively.

Monster’s profits for the first quarter were significantly impacted by $8.3 million resulting from the termination contracts with distributors, almost $5 million lost to foreign currency transactions, and $3 million in legal costs relating directly to allegations about its products.

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Companies

Symbol Name Price Change % Volume
MNST Monster Beverage Corporation 44.17 -0.73 -1.62 397,019
ESBA Empire State Realty OP L.P. Series ES Operating Pa 19.75 0.02 0.08 110

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