Celsius Stock Goes From Rock Star to Rockstar

Key Points

• PepsiCo is boosting its convertible stake in Celsius from 8% to 11% in exchange for its fledgling Rockstar Energy product line in the U.S. and Canada.

• Celsius has already more than doubled in 2025. This deal can keep the fizz from going flat.

• It's a win-win situation. PepsiCo gets to unload a laggard in its beverage portfolio. Celsius gets another shot at realizing synergies while deepening its bond with its domestic distributor.

• 10 stocks we like better than Celsius ›

One of this year's biggest turnaround stories continues to make moves in the right direction. Celsius Holdings (NASDAQ: CELH) shares are moving higher on Friday after the company expanded its relationship with global beverage giant PepsiCo (NASDAQ: PEP). Celsius will take ownership of PepsiCo's Rockstar Energy brand in the U.S. and Canada. In return, the soft drink icon will acquire $585 million in a 5% convertible preferred stock, boosting its stake in Celsius from 8% to 11%.

PepsiCo was already the distributor for Celsius' namesake brand in the U.S. and Canada. The new deal covers distribution of Alani Nu, the market share gobbler that Celsius acquired in the springtime of this year.

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It's a win for both beverage stocks. Celsius adds a more conventional energy drink to its portfolio, one that PepsiCo shelled out $3.85 billion for just five years ago. It also gets its distributor even more aligned with Celsius' interests given PepsiCo's larger stake in the business. PepsiCo also comes out ahead. With Alani Nu to distribute, it now has the fastest-growing brand in the functional beverage market on its roster. It's giving up Rockstar on its home turf for a song, but now it gets to see if someone else can make the meandering brand relevant under new leadership.

Cracking open a new can

PepsiCo is a pop star. Celsius is a pop star, too, if you look at this year's stock chart. Shares of Celsius soared 127% in 2025 before Friday's price action. Business cycles move pretty fast for Celsius. It turned heads in a good way with its flagship sparkling beverage, delivering three consecutive years of triple-digit revenue growth through 2023. The swoon came last year. Top-line jumps decelerated before turning negative in the second half of this year for three straight quarters.

The timely acquisition of Alani Nu earlier this year -- in a $1.8 billion deal -- changed the narrative. Growth prospects for Celsius' flagship brand had hit a wall, but combined with the smaller but ascending Alani Nu the two brands were gaining market share at the expense of the world's two largest players.

The only question was how badly the integration of Alani Nu would affect the bottom line. The deal for Alani Nu was actually valued at $1.65 billion after a tax benefit going Celsius' way, suggesting a trail of losses for the smaller functional beverage company. Things turned out even better than even the bulls could fathom after Celsius' blowout results earlier this month.

Image source: Getty Images.

It was a given that this summer's financial update was going to put an end to the year-over-year declines on revenue. The acquisition of Alani Nu closed at the start of the second quarter. The addition of Alani Nu was going to boost the top line, but the 84% surge for the quarter was well ahead of the 64% that Wall Street pros were modeling. However, even organic growth turned the corner as Celsius' original business came through with a 3% increase.

The bottom-line surprise was even better. Celsius delivered a quarterly profit, almost double what analysts were expecting. Celsius got a bargain in Alani Nu. At the time of the deal, Celsius argued that the $1.65 billion net price tag was a mere 3 times trailing sales and a reasonable 12 times earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for synergies of the combination. It didn't take long for those synergies to deliver a profitable jump for the combined company.

Can lightning strike twice for Celsius with Rockstar Energy? It's a different backstory this time. Rockstar isn't rising in popularity. However, this is another compelling acquisition. It's picking up a third brand for essentially a 3% stake in Celsius, also forging a stronger bond with the world's second largest distributor of sparkling beverages. This hot year for Celsius doesn't appear to be cooling down anytime soon.

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Rick Munarriz has positions in Celsius. The Motley Fool has positions in and recommends Celsius. The Motley Fool has a disclosure policy.