Russ Savage, the founder of Rockstar Energy, has significantly increased his investment in Celsius Holdings, now owning approximately 4.7% of the company. Following a recent earnings miss and what he terms management missteps, Savage is publicly calling for the ouster of Celsius’s current CEO and has offered himself as a replacement. His bold move comes as Celsius shares have seen a notable decline, and Savage believes his entrepreneurial experience is crucial for the company’s future success.
Rockstar Energy Founder Russ Savage Builds Significant Stake in Celsius, Calls for CEO Ouster
Russ Savage, the visionary founder behind Rockstar Energy, has dramatically increased his investment in Celsius Holdings, now holding a substantial stake of approximately 4.7% in the rapidly growing energy drink company. In a bold move, Savage has publicly expressed his dissatisfaction with Celsius's current leadership following a recent earnings miss and what he describes as significant management missteps. He is not only advocating for a change at the top but has also put himself forward as a candidate to take over as Chief Executive Officer.
Key Points:
- Rockstar Energy founder Russ Savage now controls 12 million shares of Celsius Holdings, representing about 4.7% of the company.
- Savage is calling for the replacement of Celsius's leadership team due to recent earnings misses and perceived management errors.
- He has offered to step in as CEO to steer the company towards future growth and stability.
Savage, who founded Rockstar Energy in 2001 and later sold it to PepsiCo for over $4 billion, believes Celsius's current management is out of touch with the market's demands. His stake in Celsius is valued at approximately $300 million. Savage has been advising Celsius on strategic changes for over a year, focusing on cost structure and marketing, but feels a more drastic leadership overhaul is now necessary.
"The CEO, the COO, the brand manager and the marketing manager all need to be fired," Savage told CNBC in a direct critique of the company's executive team.
Celsius Holdings acknowledged Savage's position and stated its openness to value-creating ideas from all shareholders. A company spokesperson commented, "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."
The call for a leadership change comes in the wake of Celsius's stock plummeting 18% on Thursday. This decline followed the company's second-quarter earnings report, which fell short of Wall Street expectations. Earnings per share were reported at 36 cents, missing the expected 43 cents, while revenue of $817.9 million also lagged behind the $870 million forecast. Net income saw a significant decrease compared to the previous year's second quarter.
Celsius Chairman and CEO John Fieldly attributed the shortfall to a product rationalization program and a strategic pause in innovation. He also mentioned the ongoing integration of recently acquired brands, including Alani Nu and the U.S. and Canadian rights to the Rockstar brand from PepsiCo.
Savage, whose entrepreneurial journey began with a modest $50,000 investment, expressed concerns about the company losing valuable shelf space in the competitive energy drink market. He emphasized the difficulty of regaining such space once lost and warned that it could lead to market irrelevance, with competitors like Red Bull and Monster seizing the opportunity.
"Once you lose shelf space, you're dead," Savage stated. "The chains will give it to Red Bull or Monster."
He further elaborated on his vision for Celsius, emphasizing the need for a single, detail-oriented leader, contrasting it with what he perceives as a diffused decision-making process within the current management. Savage believes his hands-on experience in building Rockstar from the ground up makes him the ideal candidate to revitalize Celsius.
"I'm publicly volunteering to do it," Savage declared. "The CEO has lost credibility with the investment community."
Savage's history with Celsius shares spans over two years, with his most recent acquisition of the current stake beginning in March when the stock was trading in the low $30s. He initially saw the stock as undervalued but blames management's actions for its continued slide. He expressed his disappointment, saying, "I didn't think they would wreck it this badly. Now I'm trying to help fix it."
Following the news of Savage's significant stake and his intentions, Celsius stock experienced a sharp gain on Friday, closing near $28 per share.
Video: Rockstar Energy founder builds Celsius stake, wants to take over as CEO.
Correction: This story has been updated to correct a direct quote attributed to Russ Savage. He said: "They need one person making the decisions, paying attention to every detail, not a circle of people in a firing squad."
