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Investors in Celsius Holdings Face Legal Challenges
In a developing situation, Celsius Holdings, Inc. (NASDAQ: CELH) and several of its top executives are facing a class action lawsuit related to securities fraud. The lawsuit revolves around allegations that the company misrepresented significant aspects of its financial health, particularly in its dealings with PepsiCo (NASDAQ:).
According to the claims, Celsius failed to disclose several key factors during the class period from February 29, 2024, to September 4, 2024. These factors include:
- Oversold Inventory: Celsius reportedly sold more inventory to Pepsi than what was necessary, potentially leading to a dramatic drop in future orders.
- Declining Sales: As Pepsi worked through its excess inventory, it became evident that Celsius’ sales would decrease, negatively affecting its financial outlook.
- Unsustainable Sales Rates: The sales volume recorded with Pepsi was not sustainable, creating a misleading narrative regarding the company’s performance.
- Inflated Business Metrics: As a result, the business statistics and future financial projections reported by Celsius may have been far too optimistic.
The issue gained significant attention on May 28, 2024, when a report from Nielsen indicated a slowdown in sales growth, prompting Celsius’ stock to fall nearly 13%. Analysts noted that this downturn suggested that sales would likely decrease as Pepsi continued to deplete its overstock.
The situation worsened on September 4, 2024, when a company presentation disclosed a deficit of $100 million to $120 million in Pepsi orders compared to the previous year, further compounded by the revelation that Pepsi had maintained a large surplus of inventory for the preceding 18 months.
In light of these developments, the law firm Hagens Berman has initiated an investigation into Celsius Holdings. Reed Kathrein, a partner at the firm, stated, “We’re exploring whether Celsius intentionally misled investors by portraying an overly positive picture of its operations with Pepsi, thereby obscuring the actual condition of its financial performance and sales viability.”
Investors who believe they have incurred significant losses during this period are urged to come forward. Furthermore, those with insider information relevant to the investigation may also consider options to support the inquiry. The new SEC Whistleblower program rewards individuals who provide valuable information, potentially offering up to 30% of any successful recovery made by the SEC.
Hagens Berman is committed to holding firms accountable for corporate negligence and has previously secured over $2.9 billion for clients through various litigation cases. More details about their advocacy and ongoing investigations can be found on their website.
If you wish to learn more about the Celsius Holdings situation, additional resources are available, including frequently asked questions regarding the case.
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