This note was originally published March 22, 2013 at 09:55 in Consumer Staples
Shares of Monster Beverage (MNST) are weak this morning on the news of a new study (presented at a meeting of the American Heart Association) that suggested that energy drinks can raise blood pressure and produce an irregular heartbeat in some people. In lieu of a study, we suspect the American Heart Association could have simply asked anyone who has ever had a Red Bull, espresso, or a grande latte.
What this morning’s weakness does highlight is the sensitivity of the share price to incremental, non-financial news – a phenomenon that we think will persist until we get some clarification with respect to what role the FDA will have, if any (our view is close to zero) in regulating energy drinks.
Today, we view this incremental news as a non-event, and anxiously await further studies that can reveal that water “is wet” and the sun is “kind of hot”. Our primary concern with respect to shares of MNST is not based on nonsense such as this headline, but the fact that we
remain below consensus for EPS for 1H 2013.
Finally, we hope the group funding this study saved the receipt and we also hope that it wasn’t our tax dollars doing the funding, because that kind of news is no way to start a weekend.