The Buzz
Investors sour on Monster Beverage
September 13, 2012: 11:58 AM ET
Investors are turning their noses up at beverage stocks, as the Health Department approved a ban on selling giant sugary drinks in New York City on Thursday and two senators questioned the safety of energy drinks for children.
Monster Beverage (MNST) which makes non-carbonated energy drinks, as well as iced teas, lemonades and juice cocktails, has seen its stock fall nearly 10% over the past five days. Recently, takeover rumors and talk of New York's attorney general opening an investigation into the impact of energy drinks on kids has put pressure on Monster's stock.
That pressure heated up this week. Just yesterday, Sens Dick Durbin (D-IL) and Richard Blumenthal (D-CT) asked the Food and Drug Administration to look into how caffeine and other ingredients in energy drinks affects children and teens.
The impact on beverage stocks has been palpable. Shares of Farmer Bros. (FARM) have dropped nearly 5% in five days, while Primo Water Corp. (PRMW) has shed 3.4%. Somewhat interestingly, Coca-Cola's (KO) stock is only marginally lower, but that's largely because it's having a nice bounce today. Rival PepsiCo (PEP) has shed 2.3% this week.
StockTwits traders had plenty to say about Monster and the beverage wars.
firstadopter: Will people continue to buy energy drinks if FDA forces them to lower crazy caffeine amounts like Sen. Durbin and Sen Blumenthal want? $MNST
MWM: @AntiStinkYogaPants $MNST Way Way too big of a multiple, dispute it all you want, it's been on a decline for 3 months!
On the flip side....
tickertutor: $MNST cigarettes are more dangerous than anything, and those still sell well. Apply the same model to these energy drinks. They're fine.
That may be a bit of an exaggeration. Both Phillip Morris parent Altria (MO) and rival Lorillard (LO) have lost traction over the past month, although they've had a pretty good year.
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