Celsius Holdings, Inc. (OTCMKTS:CELH) Starts Correcting
It has been a stellar few sessions for Celsius Holdings, Inc. (OTCMKTS:CELH). The company’s share price more than doubled within the span of just over a week and Monday was a record-volume session for CELH. However, it seems the run has both run out of fuel and come to an inevitable period of correction. CELH closed 8.3% down yesterday on slightly faded volume that remained well above the average.
The company used to trade on the NASDAQ until it was notified of non-compliance issues related to minimum shareholder equity requirements. After some deliberation and plans to remedy the situation, CELH withdrew from the NASDAQ voluntarily in late 2010 and started trading on the OTC markets.
The company operates in the beverage industry and is famous for its so-called “negative calorie” drink. Celsius beverages promote fat burn and help the body go through more calories when exercising, hence the catchy “negative calorie” handle. Naturally, the fine print at the bottom of the company’s website clarifies that the statements made on the page “have not been evaluated” by the FDA and that downing a Celsius beverage won’t magically make you slim down in the absence of a “healthy diet and moderate exercise”.
The company announced securing $15.9 million in financing through an agreement with Horizon Ventures, Russel Simmons and Kimora Lee Simmons, collectively described in the PR announcing the investment as “global business icons”. While the PR itself was peppered with a lot of upbeat talk about the great future opportunities before the business and the excitement of the new investors, more details of the financing were available only in a filing put up through the OTC Disclosure service, with CELH being a pink sheet company presently.
It’s only natural that the new investors in CELH are excited about the venture. After all, CELH issued them 12.9 million common shares priced at $0.89 per share – a significant discount even from CELH‘s closing price on the day of the deal. Additionally, “certain members” of the investor group purchased an outstanding convertible note held by a third party, then immediately converted the note into 5 million shares priced at $0.30 each – a good 80% below the price which CELH hit by the closing bell on the day of the deal.
Even after yesterday’s drop CELH is still well within overbought territory, so this could be another thing to keep in mind, in addition to the large numbers of $0.89 and $0.30 shares issued less than two weeks ago.
