Energy drink machine Monster drink (NASDAQ: MNST) the shares have sold for five straight weeks after peaking at nearly $ 100 per share. The Company is experiencing logistics and supply chain issues due to the shortage of aluminum cans and delays in the sourcing of certain ingredients. This resulted in the inability to meet demand in the second quarter of 2021 despite establishing the highest quarterly revenues in the history of the Company. This underlines the relentless demand for products. Supply chain and logistics remain the main concern as the third quarter 2021 results approach, as demand follows the trend of post-pandemic reopening, especially as the company plans to introduce new products to the end of the year. Patient investors waiting for opportunistic pullbacks should keep an eye out for the reversal of the recent sell-off.
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Publication of second quarter 2021 results
On August 5, 2021, Monster released its fiscal 2021 second quarter results for the quarter ending June 2021. The company reported earnings of $ 0.75 per share against consensus analysts’ estimates of 0.67 $ per share, or $ 0.08 per share. Revenue rose 33.6% year-over-year (year-over-year) to a record high of $ 1.46 billion, beating analysts’ estimates at $ 1.39 billion. The Company closed the quarter with $ 1.58 billion in cash and cash equivalents. Monster CEO Rodney Sacks said, “The energy drink category, and in particular our Monster Energy® brand, continues to show strong growth in most of our markets. In the second quarter of 2021, we continued to secure the distribution of our products in our national and international markets, including our new products launched earlier this year. We expect additional launches in the second half of 2021.
Monster co-CEO Hilton Schlosberg added, “The company struggled to meet demand in the second quarter in the United States and the EMEA region, largely due to a shortage of cans in aluminum. In order to meet increased demand, we obtained aluminum cans in excess of our contracted volumes from the United States, South America and Asia, with expected deliveries increasing sequentially in the second half of the year. the year. However, the shortage of shipping containers, as well as global port congestion can delay the arrival of imported cans. In addition, the Company has entered into supply agreements with two new suppliers of aluminum cans in the United States, which are expected to be operational in the fourth quarter of 2021. To meet such increased demand, we have experienced freight inefficiencies at the United States and EMEA, which resulted in higher cost of sales as well as increased operating expenses in the second quarter of 2021. We continue to experience rising input costs, especially of aluminum “,
Take-out conference call
CEO Sacks set the tone: “The company’s supply chain remains largely intact. However, the company continues to experience shortages in its aluminum can needs in the United States and the EMEA region, given the company’s volume growth and current supply constraints in the aluminum can industry. . The company is also experiencing delays in the supply of certain ingredients, both nationally and internationally. As a result, the company was unable to fully meet demand in the second quarter of 2021 in the United States and EMEA. We anticipate that these challenges will continue over the coming months. The company has taken steps to source additional quantities of aluminum cans from the United States, South America and Asia. The company has entered into new supply agreements with two new suppliers of aluminum cans in the United States, which are expected to be operational in the fourth quarter of 2021. We expect deliveries of additional quantities of cans to increase sequentially over the course of this year. the latter part of the year. Logistics issues, including shortages of shipping containers and congestion at ports of entry, could delay the continued international supply of aluminum cans. Separately, we continue to experience – inefficiencies in transportation as well as significant increases in domestic and international transportation costs and, like other beverage companies, an increase in aluminum cans and other costs in today’s environment, which, in addition to other factors, continue to have a negative impact on gross margin percentages.
He concluded: “We reiterate that sales over a short period, such as a single month, should not necessarily be imputed or taken as indicative of results for a full quarter or any future period. If the COVID-19 pandemic and resulting adverse economic conditions continue in some regions, the launch of our innovative new products in those regions may be delayed. In conclusion, I would like to summarize some recent positive points. Currently, the company’s flavor manufacturing facilities, co-packers, warehouses and shipping facilities, as well as bottlers and distributors are all operating. We are continually meeting our needs for aluminum cans given our growing volumes and current supply constraints in the aluminum can industry. We are happy with the new additions to the Monster Energy portfolio and expect additional launches later in the year. We plan to continue additional launches of our Reign Total Body Fuel energy drinks in other international countries. We are pleased with the rollout of Predator and Fury and our portfolio of affordable energy drinks internationally. We plan to launch our affordable energy drinks in a number of international countries during the year.
MNST Price Trajectories
Using gun charts over weekly and daily time periods provides an accurate view of the landscape for MNST stock. The weekly gun chart has slumped for five consecutive weeks with 5-period moving average (MA) resistance falling to $ 92.46 Fibonacci level (fib). The Weekly Stochastic dipped on the rejection of the 80 band to fall to the 30 band. The weekly lower Bollinger (BB) bands indicate the nominal sell close to the $ 87.05 which it is approaching. The daily guns chart is attempting to form a bottom as the daily 5 period MA held steady at $ 89.50 as the daily stochastic coiled towards the 20 band and stalled. This is a daily create or break setup that will determine the possible upside reversal breakout or a reverse split of the pups towards the daily lower BBs at $ 85.51. The daily weak market structure (MSL) buy triggers a break above $ 90.04. The daily 5 period MA is expected to slope higher and eventually cross the 15 period MA higher as the stochastic forms a mini puppy pattern up to the 20 band. The bearish case is a stochastic cross down on a rejection of the 20 band as stocks collapse below the daily 5 period MA to the daily lower BBs. Cautious investors can watch for opportunistic withdrawal levels at the $ 88.09 fib, $ 87.23 fib, $ 86.34 fib, $ 85.00 fib, $ 84.24 fib, $ 83.18 fib and 81 , $ 52 fib. The upward trajectories are from the $ 97.34 level to $ 106.71.