Monster Beverage Corp. shares saw a sharp decline of 6% in after-hours trading on Tuesday, following the release of the company’s holiday earnings and sales figures which were lower than Wall Street’s expectations. On top of this, executives from the energy-drink company announced plans for price increases and a stock split.
Monster reported fourth-quarter earnings of $301.7 million, or 57 cents a share, which was down from 60 cents a share a year earlier. Sales increased to $1.51 billion from $1.43 billion, however analysts had on average expected earnings of 63 cents a share on sales of $1.6 billion. Co-Chief Executive Hilton Schlosberg explained that a strong dollar and increasing costs were the main reasons for the reduced profit.
In addition, Schlosberg stated that the company plans to raise prices in order to offset the higher costs of production. He said that the price increases will likely be implemented in the first quarter of 2020 and that they will vary across different regions.
Schlosberg also addressed the plan for a stock split, saying that the board of directors is considering a three-for-one split. He said that the board will make a decision in the near future and that the split would be effective in the second quarter of 2020.
The news of the lower-than-expected earnings and the plans for price increases and a stock split caused Monster Beverage Corp. shares to drop sharply in after-hours trading. However, Schlosberg remained confident in the company’s future prospects, saying that the company is “well-positioned for continued growth” and that he is “confident in our ability to deliver strong financial results in 2020.”
Despite the lower-than-expected earnings and the plans for price increases and a stock split, Monster Beverage Corp. remains confident in its ability to deliver strong financial results in 2020. The company is taking steps to offset the higher costs of production, such as raising prices and considering a stock split. Although the news caused shares to drop in after-hours trading, the company believes it is well-positioned for continued growth in the coming year.
