Seeking Alpha

Monster Beverage (MNST -10.5%) looks enticing to opportunistic traders after shares fall off...

Monster Beverage (MNST -10.5%) looks enticing to opportunistic traders after shares fall off with the company targeted by a lawsuit and FDA investigation over deaths linked to consumption of its energy drink. The rationale is that lopping off over a billion dollars worth of the company's market cap could be a harsh reaction to what even the FDA considers unconfirmed allegations. As for tighter regulation of energy drinks, bulls note with Coca-Cola and PepsiCo lurking in the space, the issue could stay stuck in neutral.
Comments (10)
  • can anyone confirm the girl who died had an existing heart abnormality? if so, this seems way overdone, almost a 3 billion hit to MNST now...?
    23 Oct 2012, 03:23 PM Reply Like
  • I believe that MNST is over-valued on fundamentals alone, but KO or PEP could definitely buy them out in the 5-10B range. The lofty valuations and the desire of a high profile buyer to stay away from controversy has got to be the reason for a 10.5% drop.


    Clearly the lawsuit itself is ridiculous. With her condition and the dosage, it'd be similar to a 3 year old taking 10 Tylenol pills.


    There are warnings on the cans already. Regardless- it is a sad story, and I can understand the concerns of the family. There needs to be better education out there especially with the college drinks now proliferating beyond high school and into jr high, etc.
    23 Oct 2012, 03:25 PM Reply Like
  • Closer to a 20% drop by the end of this trading day. Amazing how a single newspaper article and a single lawsuit can bring a stock down this quickly. Monster replied to the issue in a timely manner (same day). I'm a buyer of the December 45 calls.
    23 Oct 2012, 11:56 PM Reply Like
  • Buyout rumors were being tossed around carefree when the stock was trading north of 60. This stock is on clearance sale at a 33% discount at those levels. So why has no major player announced their acquisition intentions? It's too early. If KO swooped in now to pick up the company they would look insensitive and hurt their brand image. Once things have settled down a bit I full expect someone, whether it be a public company or private equity to come in and make the acquisition if prices remain depressed at these levels.
    24 Oct 2012, 09:23 AM Reply Like
  • I think the threat is more along the lines of parents not letting kids drink these for fear of them being a threat than energy drinks actually being dangerous. People will change their behaviors based on perceived threats, not just real threats.
    23 Oct 2012, 04:31 PM Reply Like
  • Parents are not buying these drinks for their kids directly. Kids go out to a local 7-11 or other convenience store and purchase them on their own accord. While I wish America still adhered to traditional values such as eating dinner as a family and kids always telling their parents what they are doing, truth is we're not in the stone age anymore. Whether we like it or not, kids are growing up faster, acting "more adult-like" even though the maturity might not be there. MNST sales are not going to be hurt drastically by these news reports. I am long June 13 45 Calls and will be adding to my position .
    24 Oct 2012, 09:13 AM Reply Like
  • But parents are the ones buying these at grocery stores, Walmart, Target and in Costco, and parents will be the ones to complain if they are sold in schools and at school events. Like I said, I dont think its a real cause of death, but if the story gets legs people will over react.


    Nice day for your calls, btw.
    24 Oct 2012, 02:54 PM Reply Like
  • For "Puts" sake, let'em burn.....$$$
    23 Oct 2012, 06:00 PM Reply Like
  • Ehlers danlos is a congenital connective tissue disease...kinda like Marfans. Increased blood pressure or any trauma could've caused her death. Frivolous lawsuit as usual....
    24 Oct 2012, 07:53 AM Reply Like
  • The girl has ehlers danlos, which is a congenital connective tissue disease...kinda like Marfans. Increased blood pressure could've caused her death
    24 Oct 2012, 07:53 AM Reply Like
DJIA (DIA) S&P 500 (SPY)