The energy drink landscape is abuzz with high-stakes drama as Russ Savage, the billionaire founder of Rockstar Energy, has made a bold move into Celsius Holdings (CELH), building a significant stake and publicly demanding a change in leadership. Savage, who famously sold Rockstar to PepsiCo for over $4 billion in 2020, told CNBC he now controls a hefty 12 million shares of Celsius, amounting to approximately 4.7% of the rapidly growing company.
VIDEO: Rockstar Energy founder builds Celsius stake, wants to take over as CEO (1:37)
Savage's intervention comes on the heels of Celsius's disappointing second-quarter earnings, which missed analyst expectations and saw its shares plummet 18% on Thursday. He didn't mince words, telling CNBC that the current Celsius CEO, COO, brand manager, and marketing manager "all need to be fired," and he is actively putting himself forward to take the helm as CEO.
Valued at approximately $300 million at current stock levels, Savage's stake underscores his seriousness. He revealed he has been offering advice to Celsius for over a year, advocating for changes to its cost structure and marketing strategy, but feels his counsel has largely gone unheeded.
In response, Celsius issued a statement acknowledging Savage's engagement: "We welcome ideas that are potentially value-creating from all Celsius Holdings shareholders. We remain focused on executing our total energy portfolio strategy to drive durable, long-term growth. Members of our Board and management team have engaged with Russ Savage many times over the past several years."
Russ Savage, founder of Rockstar Energy.
Celsius reported Q2 earnings of 36 cents per share, falling short of Wall Street's expectation of 43 cents. Revenue hit $817.9 million, also below the anticipated $870 million, and net income attributed to common shareholders was slashed by more than half year-over-year. Celsius Chairman and CEO John Fieldly attributed the shortfall to a "product rationalization program" and a "deliberate pause in innovation," citing the integration of recent acquisitions like Alani Nu and the Rockstar brand in the U.S. and Canada.
Fieldly defended the company's position, stating that Celsius sells "1 out of every 5 energy drinks in the U.S." and remains a "key growth driver for the energy category." However, Savage countered this, calling the implication that Celsius sacrificed shelf space for newer lines a "dire signal." He warned that in the cutthroat energy drink market, losing shelf space is often a death knell, with competitors like Monster and Red Bull quick to fill the void.
Savage, who started Rockstar with a mere $50,000 mortgage on his California condo, emphasized his hands-on approach to business. He claims Celsius suffers from excessive management layers, bloated costs, and a severe lack of accountability. "They need one person making the decisions, paying attention to every detail, not a circle of people in a firing squad," he asserted, contrasting it with his own management style at Rockstar, where he meticulously oversaw every aspect from sales to innovation.
Having owned Celsius shares on and off for over two years, Savage began aggressively buying his current stake in March when the stock dipped. Initially seeing it as undervalued, he now blames "management missteps" for its continued decline. "I didn't think they would wreck it this badly," he admitted, adding, "Now I'm trying to help fix it." His public declaration seems to have had an immediate impact, with Celsius stock experiencing a sharp gain on Friday following CNBC's report of his stake.
