Monster Beverage sinks as sales slowed in 3Q
NEW YORK (AP) — Shares of energy drink maker Monster Beverage Corp. tumbled in aftermarket trading Wednesday after the company said its revenue growth slowed in the third quarter.
Monster said its net sales grew 14 percent, about half the pace of growth in the previous three quarters. Its revenue fell $36.5 million short of Wall Street's expectations. In the last few months the company has faced increased government scrutiny and the Food and Drug Administration has disclosed that it is investigating reports of five deaths and a non-fatal heart attack in people who consumed its highly caffeinated Monster Energy Drink.
Shares of Monster Beverage plunged 12 percent in aftermarket trading, falling $5.47 to $39.50. The stock dipped 12 cents to $44.97 on Wednesday trading before the earnings report came out.
Monster Beverage said its net income rose 5 percent in the third quarter, to $86.1 million, or 47 cents per share, from $82.4 million, or 44 cents per share. Revenue increased to $541.9 million from $474.7 million. Its revenue rose almost 30 percent in each of the last three quarters and grew 24 percent in the year-ago quarter.
FactSet says analysts expected the Corona, Calif., company to report net income of 55 cents per share and $578.4 million in revenue.
"The company achieved less robust growth in sales dollars than in previous quarters," Chairman and CEO Rodney Sacks acknowledged. Sacks added that gross sales in October were up 28 percent compared to October 2011, although monthly sales can be volatile.
In August, New York state Attorney General Eric Schneiderman issued subpoenas to Monster Beverage and other energy-drink makers as part of the state's investigation of the industry. U.S. Senators Dick Durbin and Richard Blumenthal have asked the FDA to take another look at the effect that caffeine and other ingredients in energy drinks have on children and adolescents. They also asked the FDA to look into the interactions of caffeine and other energy drink additives and evaluate the safety of caffeine consumption by teenagers.
In October, Monster Beverage was sued by the parents of a teenager who died after drinking two 24-ounce energy drinks within a 24-hour period. The FDA confirmed that it is investigating reports dating back to 2004 about people who had adverse reactions to the drink. The label on Monster Beverage's drinks state that the drinks are not recommended for children and people who are sensitive to caffeine.
The company, which changed its name from Hansen Natural in January, says its drinks are safe that it was not aware of any deaths caused by its products.
