Would You Buy Red Bull Stock? Energy Drink Companies Overview

We really enjoyed the research experience we gained from finding and analyzing financial data from private companies like Lego and IKEA. We wrote about them in Dreaming of buying LEGO stock and Investing in IKEA stocks articles. It was exciting work that led to us being able to evaluate these companies using the Eyestock rating.

We wanted to continue the series of these articles, and the next hero must have been the Austrian concern Red Bull — we suppose the most recognizable energy drink brand right now. Unfortunately, the latest financial statements of the parent company Red Bull GmbH could not be found in the public domain.

What do we know about Red Bull?

Red Bull stocks can not be found on the stock exchange as it is a private company. Founded in 1984 by Thai businessman Chaleo Yoovidhya and Austrian entrepreneur Dietrich Mateschitz, the company has over the past 2 decades become a world leader in the energy drinks industry. First of all, thanks to sponsorship in extreme sports, Red Bull has become a very recognizable brand. The company is clearly associated with various extreme games and kinds of sports, owns 6 football and 1 hockey teams, has Red Bull Racing teams in Formula 1 and NASCAR, and invests in e-sports.

According to Oregon Consulting Group, which released a report on the US energy drink industry, Red Bull’s share in 2022 was 44%, and that’s 10% more than its closest competitor Monster Beverages. However, according to CNBC, Red Bull still ranks second in the global market with a 13% market share versus 16.4% for Monster. We ain`t going to retell the entire history of the Red Bull brand — it probably deserves a special film or a book at least. It’s amazing how, literally out of nothing, it was possible to create an extremely cheap product to produce and bypass such giants as Pepsi and Coca-Cola.

Red Bull’s business model

It is unique. According to Bloomberg, the sponsorship payments made to sportsmen and women exceeded €1 billion in 2022. By investing in sports, the Austrian concern is creating an unbeatable basement for attracting customers and reducing the cost of attracting them (CAC) in long term. Whether Max Verstappen wins another Formula 1 race or one of the six soccer teams (including the MLS team New York Red Bulls), sales are up! As a result, having sold more than 10 billion cans, the company received revenue of 10.5 billion euros.

We know that the company’s marketing expenses are higher than the competitors bear, but the gross margin is one of the highest in the industry. It is also known that the company is super conservative in its debt policy and uses cash flow to fund investments, not borrowings.

Well, we think Red Bull Eyestock Rating would be somewhere between Lego and IKEA if it were available on the stock market. The Austrian giant’s business is booming. Even though the very idea of energy drinks is very controversial. Some people don’t see anything wrong with this. On the other hand, the combination of caffeine and sugar is not the best recipe for improving health in most cases. Although beverage manufacturers are trying to launch entire lines of energy drinks that are completely sugar-free. Many investors and even entire funds may be put off by such an agenda. But Red Bull is not looking for investment. According to Bloomberg once again, Mark Mateschitz, the son of company founder Dietrich, who died in 2022, received dividends of 582 million euros last year. His stake is 49%. Looking at these numbers, you think how sad it is that we can’t invest in Red Bull.

What remains for investments in the energy drink market industry?

However, there are alternatives to investing in energy drink stocks. We have mentioned already in this article Red Bull’s main competitor, which is Monster Beverage Corp (Nasdaq: MNST). Monster shares have Eyestock rating of 122%. This business seems to be most similar to the Red Bull model but it is public listed! Monster is also strongly associated with sports events, especially motor racing. The company’s brand Monster Energy has long been used by 7-time Formula 1 world champion Lewis Hamilton and motorcycle racing icon Valentino Rossi. Several English football clubs such as West Ham, Tottenham Hotspur, Southampton, Aston Villa and Newcastle have been or continue to be sponsored by the energy drinks manufacturer. Finally, Monster has a sponsorship deal with the UFC.
The financial performance of the company is characterized by a fairly high gross margin of 53% and a net profit margin of 23%. Monster Beverage is an extremely solvent company due to its lack of debt. These characteristics are very similar to the description of Red Bull’s business model. Ultimately, a rating of 122% according to the Eyestock methodology means an extreme degree of investment attractiveness. MNST stock is trading at $60.79 as of March 18 and this is above average estimates, but there is still potential for growth by 15% to the historical maximum price-to-earnings ratio level of 45, which corresponds to a price of $70. Monster stocks took position #20 in our Best Stocks For 2024 ranking.

National Beverage Corp (ticker FIZZ on Nasdaq) is another option. The Company develops, produces, markets, and sells a distinctive portfolio of sparkling waters, juices, energy drinks and carbonated soft drinks primarily in the United States and Canada. The product positioning is somewhat different as their brands include beverages aimed at active and health-conscious consumers. The company’s financial position is characterized by the absence of debt (is this really a trend for the industry?), however, the business margins are somewhat lower than those of Monster and, presumably, Red Bull. Ultimately, the Eyestock rating for FIZZ shares is 120%, which also indicates the high quality of the investment idea, and the growth potential to the maximum value estimate is higher — almost 60% (as of March 18).

Celsius Holdings (XNAS: CELH) beverage company with a rating of 100% equals our benchmark of an ideal company to invest is a strong alternative for retail investors. It is a large-cap company ($20.8 b) headquartered in Boca Raton, Florida, producing pre- and post-workout functional energy drinks and protein bars. Its flagship brand is CELSIUS, which is a calorie-burning functional energy drink.

Coca-Cola (NYSE: KO) with a rating of 72% and Pepsi (NASDAQ: PEP) with a rating of 62% look like more mature firms in this company with less attractiveness in terms of business growth, but they pay quite generous dividends at the level of 3-4% annually. PEP stocks as well as KO stocks are undervalued by the Eyestock valuation method.