Monster Beverage Corp.
A Monster Short
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Monster Beverage Corp.
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Research Overview

INDEX:
S&P 500
Sector:
Consumer Staples
Position:
Short
Date:
Apr 8, 2025

After conducting a forensic financial review of Monster Beverage Corp. (Nasdaq: MNST), a marketer and distributor of energy drinks and alcoholic beverages, Spruce Point believes that the Company faces pressures from increasing competition, changing regulatory environments, and unsustainable international growth. We believe that investors may be mistakenly perceiving this food and beverage stock as a “safe stock” during this period of tariff-driven market turmoil. Furthermore, we believe Monster trades at an undeserved premium to The Coca-Cola Company (“Coke”), upon which Monster is highly dependent for its distribution. Based on our investigation, we estimate a 25% - 40% potential long-term downside and market underperformance risk. We expect Monster’s share price to underperform the food and beverage industry along with the broader equity market.

 The report highlights several key concerns with the Company, including:

  • Monster’s core energy brand is being challenged in a changing environment where social media celebrity endorsers and athletes can rapidly launch new products to their millions of followers. Moreover, the negative stigma and health concerns over energy drinks has shifted market positioning of new products towards healthier energy and hydration drinks.
  • Diminished distribution claims, increased promotions, and slow growth in U.S. and Canada further raise concerns about Monster’s mindshare amongst its consumers.
  • We do not believe Monster’s international growth is as attractive as its domestic growth, as only two countries have been added in the past two years, competition has vastly expanded, and regulation appears likely to increase.
  • Monster switched auditors in 2023, and we have identified several concerns with the financial reporting and accounting choices it has made since this change. Further, we believe Monster has historically failed to implement best corporate practices by not separating the duties of the Chief Financial Officer, Chief Accounting Officer and Chief Operating Officer roles.                                                                                                                          
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