Monster Beverage

IThe business

Monster Beverage makes and brands energy drinks and does very little else. Most of the work of filling and shipping the cans is done by other companies. It designs the drinks, owns the brands, buys the cans and ingredients, pays for the marketing and sponsorships, and sells to bottlers who deliver to the shelf. A small flavour business it owns, American Fruits and Flavors, makes the main flavours.² That is why the accounts look so unlike a bottler’s: a gross margin of 55.8% in 2025, operating expenses of 26.7% of sales, and capital spending of only $132M.²

The 10-K names the Monster Energy line, the Ultra zero-sugar family, Java Monster coffee drinks, Juice Monster, Reign and Reign Storm, and Bang, which Monster bought out of bankruptcy in 2023, plus a set of older energy brands it took over from The Coca-Cola Company in 2015, among them NOS, Burn, Full Throttle and Mother.² It also sells low-priced Predator and Fury, a few craft beers and flavoured malt drinks, and has an accumulated catalogue of more than 21,600 trademarks and applications.² In 2025 the Monster Energy Drinks segment was 92.4% of net sales, Strategic Brands 5.7%, the beer and malt business 1.6% and the flavour business 0.3% C (calculated).²

The company sold 959.0 million cases of energy drinks in 2025, in the industry’s 192-ounce case, up 13.3% on 2024. Average net sales per case were $8.48, down 1.6%, because of currency and a shift toward lower-priced markets.² That detail matters. Growth in 2025 came from volume, not price, even after the company raised prices in the fourth quarter.²

Where it sells

Net sales outside the United States were $3.44B in 2025, 41% of the total, and grew 16.2% in constant currency.² In the second quarter of 2026 the international share rose to 46%, with sales outside the US up 34.6% to $1.16B C (calculated).³ Monster says one or more of its drinks are distributed in 158 countries and territories, and the Monster brand itself in 138.⁹ The investor slides show value share leadership in Spain at 45.1%, Brazil at 43.8%, Argentina at 52.8%, Mexico at 37.8%, Great Britain at 36.3% and Kenya at 60.0%.⁹ Those are Monster’s presentation of Nielsen and Circana data, and I treat them as the company’s claim rather than an audited fact.

The US is still the larger half. It is also where Nielsen puts Monster Energy Company (MEC), which includes Monster, the Strategic Brands and Reign, at 34.3% of dollar sales over the 13 weeks to 15 November 2025, against 32.6% for Red Bull.⁹ I come back to that table in the competition section.

Who actually buys from Monster

Monster’s customers are mostly bottlers. In 2025 US full service bottlers took 45% of gross billings and international bottlers 43%. Club stores and e-commerce took 8%, and everything else together 4%.² The names are the Coca-Cola system. Coca-Cola Europacific Partners alone was about 15% of net sales in 2025, up from 13% in 2023, and Coca-Cola Consolidated about 10%.² Two customers, one quarter of sales. Monster lists Walmart, Costco, Amazon and Asahi Soft Drinks as other large customers.²

The model makes the business simple to describe. Monster collects a price per case from the bottler, the bottler gets the shelf and the delivery truck, and the retailer’s margin is the bottler’s problem. Accrued promotional allowances were $384M at the end of 2025 and $434M at 30 June 2026.²⁶

What a case earns

Take the 2025 figures at face value. Net sales were $8.29B and cost of sales $3.66B, which leaves $4.63B of gross profit C (calculated).² Selling, distribution, general and administrative costs plus impairments came to $2.21B, leaving $2.42B of operating income.² Per case that is about $8.65 of net sales, $4.83 of gross profit and $2.52 of operating income on 959 million cases C (calculated).² I can’t split those cleanly between Monster and the Strategic Brands, which carry lower revenue but higher margin per case because they are concentrate sales, and the 10-K does not give the profit by segment in a form I can use.

The record is more cyclical than the 2025 number suggests. Gross margin was 63.7% in 2016, then fell to 50.3% in 2022 as aluminium cans, sugar and freight went up, and recovered to 55.8% by 2025.⁴⁵² Operating margin followed, from 35.6% to 25.1% to 29.2% C (calculated).⁴⁵² That swing is the most important thing to understand about the earnings. It tells me the 2025 margin is neither a floor nor a ceiling.

The first half of 2026

The numbers keep improving. Net sales for the six months to June 2026 were $4.89B, up 23.3%, or 19.8% without currency.³ Operating income was $1.47B, up 22.4% C (calculated).⁶ Net income was $1.15B. Look at the second quarter, though. Sales rose 20.2% and operating income only 17.2%, because selling costs rose to 10.6% of sales from 9.3% and distribution to 4.7% from 3.9%.³ Monster says the extra marketing is to reach a broader consumer and raise household penetration.³ The operating margin in the second quarter was 29.2%, against 29.9% a year earlier C (calculated).⁶ I take that as a decision to spend some of the growth, which is fair, but it means the margin I see today is not rising.

Splits, so the numbers match

Monster split its stock two for one on 10 August 2026, as a 100% stock dividend to holders of record on 24 July.¹³ Every per-share figure on this page is on the new basis, including the price of $47.34, which is already split-adjusted in the Nasdaq record.¹ Documents filed before the split, the 10-K and the proxy among them, show half the share count and double the per-share figures. There was also a two-for-one split in 2023. I restate older years to today’s basis and say so in the tables.⁶ The 10-Q for the second quarter shows diluted shares of 1,977 million on the new basis, which I use for value per share.⁶

IIThe moat

An enduring advantage is a cost or a habit that a rival with money and talent can’t copy in a reasonable time. Monster has two: a brand that gets bought repeatedly by a young and growing base of consumers, and a distribution system that reaches shelves in 158 countries without Monster owning a truck. The second one is less secure than it looks, because Monster doesn’t own it.

What works is the cycle. Rising volume lets Monster negotiate better prices for cans and ingredients. A richer margin pays for sponsorship, which brings new buyers. Bottlers prefer to give cooler space to the brand that turns fastest. The US is the best proof of the cycle: Monster’s own brand gained 0.4 points of dollar share in a year in which new rivals arrived.⁹

Evidence it is widening

• Case volume rose 13.3% in 2025, and sales outside the US grew 16.2% in constant currency.²
• Gross margin recovered from 50.3% in 2022 to 55.8% in 2025 as price rises held, and was 55.5% in the first half of 2026 C (calculated).⁵²⁶
• Monster says in Western Europe it is the fifth largest fast-moving consumer brand, ahead of Pepsi and Heinz, and the largest contributor to growth among the top ten.⁹ That is the company quoting NielsenIQ data.
• 13% of Monster Energy Company shoppers are new to the category, which Monster’s slides put at an extra $276M of category growth.⁹
• Monster’s dollar sales grew 12.4% in the 13 weeks to 15 November 2025 against 10.7% for the category.⁹

Evidence it is narrowing

• Alani Nu’s US dollar share rose 2.1 points in a year to 6.1%, and that brand now sits inside a company with 17.5% of the category, one distributor and a Pepsi investor with two board seats C (calculated).⁹¹⁴
• Red Bull lost 1.3 points of share in the US to 32.6%, yet it grew dollar sales 6.4%. It is still large, still profitable and private.⁹
• Monster Energy Company as a whole lost 0.5 points of US share to 34.3% even as Monster alone gained 0.4. The slides do not say why.⁹
• The second-quarter 2026 selling cost rose by 1.3 points of sales, which suggests Monster is paying more to keep its growth C (calculated).³
• Reign’s and Bang’s results are not broken out. The company has taken impairments on its beer business of $138.8M in 2024 and $53.7M in 2025.²

On balance I think the advantage is wide in the places where Monster already leads, and thinner than the margin suggests in the US market where it now fights a better-funded rival field. The margin is a measure of how well it has executed. It is not proof of how hard the position is to attack.

IIIThe competitive advantage

Three companies decide the global energy drink category: Red Bull, Monster and the Celsius group, with Coca-Cola and Pepsi as the two distributors behind them. Red Bull is private. Celsius is public and now owns Alani Nu and Rockstar. I compare them in turn, using only what each publishes.

The Coca-Cola stake and distribution agreements

This is the part of the story most people skip, and it explains the whole structure. In 2015 Monster and The Coca-Cola Company swapped assets. Monster took over Coca-Cola’s energy brands, including NOS, Full Throttle and Burn, and gave Coca-Cola its non-energy drinks. Coca-Cola took 16.7% of Monster, paid $2.15B in net cash, and began moving Monster’s US distribution into its bottler network.¹⁵ Today every US territory and substantially all of those abroad run through that network.²

The ownership position is simple. On 31 October 2024 Coca-Cola reported 204,243,204 shares, 21.0% of the company, with 129,591,548 held through European Refreshments in Ireland.⁷ That is six times the 34,040,534 shares it was issued in 2015, which is exactly what the 2015 and 2023 splits would give if it has neither bought nor sold since C (calculated).⁷¹⁵ After the 2026 split it is 408.5 million shares, worth $19.3B at $47.34 C (calculated).⁷¹ At the end of 2025 Coca-Cola carried the stake at $5,593M and gave its market value as $15,659M.¹⁶ The 10-K puts the holding at about 20.9% of the shares outstanding, which has risen only because Monster bought back its own stock.²

The agreements around the stake matter more than the stake. Coca-Cola and its affiliates agreed not to compete in energy drinks in certain territories until the relevant distribution agreement ends. The international coordination agreement was renewed in February 2025 for five years.² Coca-Cola is also entitled to a termination fee if it ends the agreements after a change of control involving one of its competitors.² Coca-Cola earns fees under these agreements, which it reports inside its geographic segments, though it does not give the amount.¹⁶ The 10-K warns that the two companies have disagreed on how the agreements apply and could again, and that Coca-Cola does not control all its independent bottlers.²

A voting term caps the influence. Coca-Cola must vote shares above 20% in line with other holders on a takeover proposal, and a bidder opposed by Coca-Cola would need more than 62.5% of the other shares.² A buyer of Monster would be buying Coca-Cola’s consent as well. I take two points from this. Coca-Cola is a partner whose interest runs through volume: its fees and its bottlers’ margins depend on cans moving. And if Pepsi can run a similar arrangement with Celsius, the two systems now fight each other through their energy brands.

The Coca-Cola link tightened this year in a new way. On 25 September 2026 Monster said Rob Gehring, its chief executive for the Americas, would leave on 30 November to become president of Coca-Cola North America.¹⁷ The same man spoke for Monster at its December 2025 investor meeting as Chief Growth Officer.⁹ The company will have Emelie Tirre, its Chief Strategy Officer, cover the Americas on an interim basis.¹⁷ A senior Monster executive moving to run the partner’s North American system might help Monster in practice. It also shows how closely the two organisations are joined.

Celsius and the Pepsi system

Celsius is the rival that has changed the most in two years. It bought Alani Nu on 1 April 2025 for $1,275.0M in cash, 22,451,224 of its shares and up to $25.0M more, funded in part by a $900M term loan.¹⁴ On 28 August 2025 it did a second deal with Pepsi: it received Rockstar in the US and Canada, issued Series B preferred shares to Pepsi, gave Pepsi a second board seat and signed a ‘captaincy’ in which Pepsi uses commercially reasonable efforts to sell and distribute Celsius products in the US.¹⁴ Pepsi is now primary distributor of Celsius, Alani Nu and Rockstar in the US and Canada.¹⁴

The table shows two different companies. Monster earns $2.42B on $8.29B. Celsius earned $141M on $2.52B in 2025, though its first half of 2026 was much better, at $214M on $1.60B.¹⁰ Celsius is smaller by profit, in a leveraged state and sharing the stage with its distributor’s preferred stock, and it has not yet shown the margin that Monster earns on a similar product. Monster’s cost per case benefits from being larger. I can’t prove the margin gap is permanent, since Celsius is still integrating three brands.

Alani Nu is the risk that matters most. It grew dollar sales 68.6% in Monster’s own Nielsen table and added 2.1 points of share in a year.⁹ It is the one brand that is changing the mix of who buys energy drinks, towards women and wellness buyers. Monster’s answer is Reign Storm, FLRT and Bang, which it describes as better-for-you energy.²⁹ I can’t judge from the public data whether it will land.

Red Bull, from public data only

Red Bull’s own page gives 13.969 billion cans in 2025, up 10.2%, and turnover of EUR 12.196 billion, up 8.6%, from EUR 11.227 billion in 2024.¹⁸ Monster sold 959.0 million cases of 192 ounces. If I assume every Red Bull can is the standard 8.4 ounces, its volume is about 117 billion ounces against Monster’s 184 billion C (calculated).¹⁸² Red Bull sells larger cans too, so its true figure is higher, and I can’t narrow the range. I would not claim from public data that Monster is larger by volume worldwide. In the US, however, Nielsen dollar data puts Monster Energy Company at 34.3% and Red Bull at 32.6%.⁹ Red Bull’s US share fell 1.3 points in the year and Monster Energy Company’s 0.5.⁹

Money is where the two cannot be compared. Red Bull’s turnover of EUR 12.2B includes its own selling in many markets. Monster’s $8.29B is what bottlers pay it, which is lower per can because the bottler’s margin sits outside Monster’s accounts. Monster’s model earns a high margin on a smaller revenue number. Red Bull publishes no profit figure on that page, and I won’t guess one.

Other competitors and the acquisitions

Monster’s 10-K lists KDP, which bought the Ghost brand, along with Celsius, Alani Nu and Red Bull as the direct competitors in the US, and Red Bull, Rockstar and a long list of local brands abroad.² In Nielsen’s table Ghost held 2.9% of dollars and grew 17.5%, C4 2.8% and Bloom, a new entrant, reached 1.4%.⁹ Bloom’s sales rose 936.6%, which is the sign of how easily a new brand can enter if it gets distribution.⁹

Did Monster buy Alani Nu? No. Celsius did. Monster’s own deals in the decade were few: Coca-Cola’s energy brands in 2015, the flavour maker AFF in 2016 for $688.5M, the beer maker CANarchy, renamed Monster Brewing Company, in 2022 for $329.5M, and the Bang brand in 2023 for $363.4M C (calculated).^15215228 The 2026 filings show no acquisition. The beer business has since cost $138.8M and $53.7M of impairments in 2024 and 2025 and made $134.7M of sales in 2025.² The Bang deal looks better. It is now one of the performance brands the 10-K names, and the 10-K counts it among the performance brands.² Total spent on all acquisitions from 2016 to 2025 was $1.38B, about 11% of the ten years of operating cash C (calculated).⁸

IVManagement

Two men have run Monster since November 1990. Rodney Sacks was chief executive from 1990 to January 2021 and then co-chief executive. Hilton Schlosberg was president, chief operating officer and for 24 years chief financial officer, then co-chief executive. On 13 June 2025 Schlosberg became sole chief executive and Sacks moved to a role in strategy over marketing, innovation and litigation, with a transition letter that keeps him as chairman through 31 December 2026.¹¹ Both have led the company for more than 36 years.¹¹ The board has said it will look at candidates to succeed Sacks as chairman.¹¹

The notable fact is the pace of change in the second tier. In six months Monster named a new chief accounting officer, said its Americas chief would go to the partner’s North American unit, and lost a director who runs its beer business.²³¹⁷²⁴ I don’t read any of that as a warning. I read it as a company whose two founders are in their final stretch and whose next layer is still forming.

Pay, and what it pays them to do

Schlosberg’s total pay for 2025 was $19.28M: salary $1.25M, stock awards $10.69M, option awards $3.49M, a cash bonus of $3.75M and $0.10M of other items.¹¹ Sacks received $13.85M, with a $2.72M bonus.¹¹ The bonus is formula-driven. Seventy-five per cent depends on adjusted operating income against a pre-set range; twenty-five per cent on the committee’s view of individual performance.¹¹

Here is how the 2025 bonus worked. The threshold was $2.162B of adjusted operating income, the target $2.276B and the maximum $2.390B. The result was $2.522B, which is 11% above the target and 6% above the maximum, so the formula paid 200%. The committee gave all six executives 150% on the individual portion.¹¹ The long-term stock follows the same pattern. The 2023 grants vested on cumulative adjusted diluted earnings per share for 2023 to 2025, with a threshold of $3.899, a target of $4.104 and a maximum of $4.310 on the old share basis. The result was $5.323, 23% above the maximum, so the shares paid 200%. Schlosberg received 270,400 shares against a target of 135,200.¹¹

Follow the incentives and the pattern is clear. Pay depends on profit growth, with three-year earnings per share as the stock goal, and on beating a budget that management helps shape. The 2025 PSU grants (2025 to 2027) also run on cumulative adjusted EPS.¹¹ That pays them to grow earnings and, at the margin, to buy back stock, since fewer shares lift EPS. I tested how much the buybacks mattered. The 2024 tender cut the share count by about 5%. If the diluted share count had stayed at its 2023 level, 2023 to 2025 GAAP earnings per share would have been about $4.77 on the old basis instead of the $4.97 reported, a gap of $0.20 or 4% C (calculated).²²⁵ So buybacks do not explain the beat. The bars were set well below what the business did.

That is the real issue. I can’t tell from the filings whether the goals were low or the business was simply better than anyone expected. The consequence is the same in both cases. The pay plan has not recently asked for more than the business was already likely to deliver. Shareholders have been tolerant: 823.3 million votes for the 2026 pay report and 42.6 million against, about 95% in favour C (calculated).²⁶ That is a vote taken with the founders and Coca-Cola holding close to 30% of the shares between them.

Their own money

Sacks and Schlosberg are both general partners of the Brandon limited partnerships, which hold 70.1 million of the old shares between them. The proxy gives Sacks 73.4 million and Schlosberg 75.6 million, counted partly the same way. All directors and executive officers together held 79.8 million, 8.1% of the shares in March 2026, which is 160 million shares on today’s basis and about $7.6B at $47.34 C (calculated).¹¹¹ A founder group with $7.6B of its own money in the stock has the strongest alignment a reader can ask for. One small blemish: Sacks has pledged 100,000 shares, about 0.1% of what he is deemed to own, despite a policy that bans pledging except with the compliance officer’s approval.¹¹

Coca-Cola is the other large holder, with 20.9%, followed by Vanguard at 6.5% and BlackRock at 5.2% in the proxy table, whose figures come from older filings.¹¹ The result is a company that two founders and one partner jointly steer. That can be good for a long-term view. It also means an outside shareholder has little say.

What they did with the money, over a full cycle

I take 2016 to 2025 as the cycle. It covers a tax cut, a pandemic, a can and sugar price shock, and a tender offer. Over those ten years Monster generated $13.1B of operating cash flow. It spent $1.25B on property and equipment, $10.6B on buybacks and $1.38B on acquisitions, and it paid no dividend C (calculated).⁸ The cash and investment pile went from $0.6B to $3.3B, and equity from $3.3B to $8.3B C (calculated).²¹²

Three things stand out. The buybacks were large and lumpy, but they mostly came when the stock was cheaper than today. The 2024 tender paid $26.50 on today’s share basis, and the stock is now 79% above that C (calculated).²⁵¹ In the first quarter of 2026 Monster bought 1.4 million of the old shares at $73.86, equal to $36.93 now, which is 28% below today’s price C (calculated).²⁷ The net share count fell 18% over the decade. At $47.34, the 430 million fewer shares are worth about $20.4B against the $10.6B spent, though that comparison is flattering because stock pay put some shares back C (calculated).⁸¹

Second, acquisitions have been small and mixed. The beer business has absorbed $330M of purchase price and $192.5M of impairments in two years for $134.7M of annual sales C (calculated).²⁵ Management said in the investor slides that it wants to be profitable there.⁹ It is a side bet that has not paid. Third, there is no dividend and a $4.2B cash and investment balance at 30 June 2026 against no debt.⁶ Cash is 4.5% of the market value. Another large tender is possible, as in 2024, and the board added a $500M program on 14 May 2026 on top of $400M left, so $900M is available.²⁶⁶ I do not forecast it.

The return on the capital Monster has employed is very high. Operating profit after tax over equity plus debt less cash and investments was about 37% in 2025 and 26% in 2016 C (calculated).²²¹ Those figures are inflated because buybacks have shrunk book equity, and I wouldn’t lean on them. Capital spending of 1.6% of sales is the better evidence: the business needs very little money to grow.

VFinancials

Monster’s accounts are plain. One class of stock, no pension to speak of, no debt outside a $750M draw in 2024 that was repaid by the end of 2025, and a balance sheet that is mostly cash, receivables, brands and goodwill.² The largest judgements are the goodwill and brand values, which have already been written down in the beer business, and the promotional allowances accrued against sales.²

Growth and margins

Net sales grew from $3.05B in 2016 to $8.29B in 2025, 11.8% a year C (calculated).⁴² Operating income grew more slowly, 9.3% a year, because margin fell from 35.6% to 29.2% C (calculated).⁴² Earnings per share grew faster still, 14.0% a year to $0.97 on today’s basis, helped by 18% fewer shares and a lower tax rate C (calculated).⁸ The pattern is the opposite of the usual story. This company has lost margin and still compounded profit at nearly 10% a year because volume was so strong.

Earnings quality

The tax rate has bounced: 34.0% in 2016, 13.3% in 2020 when exercised stock awards cut the bill, and 23.2% in 2025 C (calculated).²¹²⁸² I use 24% going forward, in line with the 23.9% and 24.4% of the last two second quarters.³ Interest and other income was $63.2M in 2025 and $87.8M for the twelve months to June 2026, about 3% of pre-tax profit, earned on the cash pile C (calculated).²⁶ I value that cash separately, so I take the interest out of operating profit.

Stock pay rose from $68.8M in 2023 to $125.7M in 2025, 1.52% of net sales C (calculated).² I count it as a cost, as the income statement does. Impairments hit operating income in each of the last three years: $38.7M in 2023, $127.1M in 2024 and $38.4M in 2025 for goodwill and intangibles, plus smaller property write-downs; those of 2024 and 2025 were in the beer business.²

The balance sheet shows a different strain. Accounts receivable were $1.62B at the end of 2025, up 32% from $1.22B, while sales rose 11% C (calculated).² That is 71 days of sales, against 60 a year earlier and 54 in 2016 C (calculated).²²¹ At 30 June 2026 receivables were $1.90B.⁶ A bigger international mix and longer payment terms with overseas bottlers explain some of it, though I haven’t found the company saying so. If it is a timing effect from bottlers building stock, it reverses. If it is looser credit, it is a problem. I can’t tell from the filings, and I show the cash it uses in the owner cash table below.

From profit to cash

Operating cash flow in 2025 was $2.10B against net income of $1.91B. Depreciation of $114M, stock pay of $126M and $50M of impairments added about $290M; the growth in receivables took $301M C (calculated).² After all changes in working capital the net drag was about $120M, or 15% of the $802M increase in sales C (calculated).² In 2024 working capital released $98M because inventories fell $212M.² My model assumes 12% of each year’s added sales goes into working capital, between those two years.

Capital spending dropped from $264M in 2024 to $132M in 2025. Monster owns plants in Phoenix and Norwalk that make Bang and some other drinks, and most of its capital spending since 2022 has come in those years.² I treat $165M a year as the cost of standing still, which is about 1.4 times depreciation and amortization of $120M, with a range from $140M to $220M E (estimate).⁶

What an owner could take out

Here is the number I care most about. If Monster stopped growing and simply kept its brands and plants in order, how much cash could it hand to its owners each year? I start with the last twelve months to June 2026 and take out interest income, because I value the cash separately. I tax operating income at 24%, add depreciation and subtract the standstill spending. Stock pay is already inside operating income, so I don’t take it out twice.

The answer is about $2.0B, or $1.01 a share E (estimate). That is only 6% below reported net income, so for Monster the accounting profit is a fair guide to what an owner could take out. The reason is the low need for capital, set against a stock pay bill that is already deducted. An owner paying $47.34 gets 2.1% of the price back each year from today’s business, against 4.94% on a ten-year Treasury.²⁹ Add the cash pile, which is 4.5% of the market value, and the picture is still one of a high price, not a high yield. Everything above that has to come from growth.

The balance sheet

At 30 June 2026 Monster held $2.19B of cash, $1.23B of short-term investments and $0.78B of long-term investments, $4.20B in all, and no debt. Its credit facilities were undrawn.⁶ Goodwill was $1.33B and other intangibles $1.38B.⁶ Stockholders’ equity was $9.36B.⁶ Purchase commitments were $218.9M.⁶ I count the entire $4.2B as an addition to value, even though some of it is working cash, and I note that if $1B of it were really needed to run the business, my values fall by about $0.51 a share C (calculated).

VIValuation

Start with what would go wrong

Before any numbers, I ask what would most likely make this a poor investment from here, and work back from that. The business is excellent. The ways it goes badly are three, in the order I think most likely.

1. The business does fine and the multiple falls. If my base earnings arrive, $2.46 a share in 2036 against $1.07 now, but the market pays 25 times them instead of 44, the return on $47.34 is about 5.5% a year, and at 20 times it is 3.8% E (estimate). Nothing has to break. In October 2018 the market paid 30 times and in October 2019 28 C (calculated).¹⁸
2. The distribution system changes. 88% of billings go to Coca-Cola bottlers, two of them are a quarter of sales, and Monster does not control them.² A change in how Coca-Cola prioritises its own energy interests, a bottler consolidating, or Pepsi’s now-combined Celsius, Alani Nu and Rockstar portfolio winning the cooler would show up first in US share. One point of US dollar share is about $0.24B of retail sales a year, on Nielsen’s $6.04B for 13 weeks, and Monster’s own net sales on a point are lower because the shelf price includes the bottler’s and retailer’s margins E (estimate).⁹
3. A rule or a taste shift hits the US. The company lists restrictions on sales to young people, caffeine limits, food-dye and ingredient rules, SNAP exclusion and excise taxes among its risks.²⁹ Customers can also move. A fall of 10% in Monster’s US sales would cut group sales by about 6% and, at the gross margin with costs unchanged, operating income by perhaps $0.25B E (estimate).²

I can’t put honest odds on the second and third, so I don’t try. I can show what the first does, and I do below.

What the price implies

On consensus, earnings per share go from $0.97 in 2025 to $1.16 in 2026 and $1.32 in 2027, up 20% and 14%.³⁰ My base case is a little below that: about $1.29 for 2027, and $1.43 for 2028 against a consensus of $1.50 from five analysts E (estimate).³⁰ So I am a little more cautious than the market for next year, and much more cautious about what a buyer pays in 2036.

The multiple is the surprise. At the end of October 2016 the stock traded at 40 times that year’s earnings. Today it trades at 44 times the last twelve months. In between it fell to 28 and rose again C (calculated).¹⁸ Over the decade the price rose 3.94 times and earnings per share 3.62 times, so the multiple barely moved, and a holder earned 14.7% a year, nearly all of it from earnings growth C (calculated). That is a good decade, with almost no help from the multiple.

Reverse DCF: what the price needs

Held at my base margins, the price needs net sales to grow about 13.4% a year for ten years, to $34.7B in 2036 and operating income of $10.1B, from an estimated $9.9B and $2.9B in 2026 C (calculated). The last nine years gave 11.8% and the first half of 2026 gave 23.3%, with a weak dollar helping.²³ Even with a bull-case margin of 32% it needs 12.1% C (calculated). The category itself is forecast at 8.0% a year to 2030 by GlobalData, per Monster’s slides.⁹ Monster would have to outgrow that by five points a year for ten years.

There are two other ways to read the same price. One is that it equals my base cash flows at a discount rate of about 7.0% C (calculated). That is the return the price offers if my base is right, 2.1 points above the Treasury. The other is to ask what a buyer pays in 2036.

This table is more generous than my DCF, and I want to be fair about why. My discounted cash flow values the business after 2036 at about 19 times operating profit after tax, which is what 3.5% growth and a 40% return on new money are worth at an 8.5% discount rate. The market has paid between 28 and 44 times earnings in the eleven Octobers since 2016, averaging 35 C (calculated).¹⁸ If it keeps paying 35 times in 2036, the price returns about 8.3% a year on my base earnings, close to my required rate. That is the real bet in this price: not a faster business, but a multiple that stays where it has been. I can’t say it will. Whether a company growing 5% a year deserves 35 times earnings is a matter of the discount rate, and I use 8.5%, which is why my base is lower than the price.

The discount rate

I discount at 8.5%. The capital asset pricing model, with the 4.94% ten-year Treasury and Damodaran’s 4.20% implied equity risk premium, gives 8.3% on Monster’s beta against the market over 119 months, 7.5% over 36 and 7.0% over 60 C (calculated).²⁹³¹³² The betas are 0.80, 0.60 and 0.49. I take the highest, 8.3%, and round up, because Monster’s sales depend on one category, one partner and a young buyer, and low betas can understate that. The betas use price returns, without dividends, since there are none.³²

At 9.0% the base is $31; at 9.5%, $28 E (estimate). No row of the table reaches the price. The corner nearest it, at 7.5%, is about the rate the price itself implies.

Three cases

My base case is Monster carrying on at about the category’s pace and a bit above it. Net sales grow 12% in 2027, which is below the 20% of the first half of 2026 because currency and some price help fade, then ease each year to 5.5% by 2036 E (estimate).³ The operating margin stays at 29.5% for three years and slips to 29.0%, because Monster is spending a larger share on selling and distribution and does not control can prices E (estimate).³ That puts net sales at $22.0B and operating income at $6.4B in 2036, up 9.0% a year from the last twelve months, against 9.3% a year in the last nine years C (calculated).

The bull case has Monster keep winning share abroad, with growth of 14% in 2027 and 7% in 2036, and the margin climb to 32%, still under the 35.6% of 2016 E (estimate).⁴ The bear case has the US stall under Celsius’s combined portfolio and the margin slide to 24% as Monster pays for marketing, which is where it was in 2022 E (estimate).⁵ Even the bear is a good business. It is only a poor purchase at $47.34.

What I can’t judge

Some inputs I can’t know, and I would rather say so than pretend. I don’t know how much of the 2026 sales growth is price, currency or real volume, since the second-quarter release does not split it. I don’t know how fast Alani Nu and the Celsius family will grow once the combined company has integrated, or whether Pepsi’s bottlers will push them harder than Coca-Cola’s push Monster. I don’t know why receivables jumped. I don’t know what terms Coca-Cola’s fees carry, because neither company discloses the amount. And I can’t know what multiple the market will pay in 2036. That last one matters more than the rest together, which is why I show the returns at several multiples instead of picking one.

Multiply it out

My base needs several things at once. Sales averaging near 9% a year for ten years: I would give that 45%. The operating margin staying near 29% against heavier marketing and can costs: 60%. Coca-Cola’s system and Coca-Cola itself staying committed: 85%. No ban, tax or SNAP rule that cuts US sales materially: 85%. Share held against Celsius, Alani Nu, Red Bull and the next entrant: 70%. Multiplied, that is about 14% E (estimate). These overlap, since good sales help the margin and the share, so the true figure is higher, perhaps a quarter. And missing one doesn’t ruin the case. But the price needs more than my base. It needs my base and a multiple near today’s in 2036. If I give the second a one-in-three chance, the joint odds are about 4% before overlap E (estimate). The argument for the price is not simple. It needs many things to go right together.

Quality and price are two questions

How good is the business? Among the best I have studied: a 29% operating margin, almost no capital need, no debt, a brand with a young and growing buyer, and a distribution system that has worked for eleven years. How good is the price? Poor, on my numbers. At $47.34 it is 5% above my bull case. A great business can be a poor purchase at the wrong price, and on this evidence that is what this looks like.

It helps to compare it with the next best use of the same dollar. A ten-year Treasury pays 4.94% with no risk to the dollars promised.²⁹ Monster returns about 7.0% a year on my base, two points more, with all the risk of a share. On this site the two I can compare cleanly are Costco, which returns 6.2% a year on its page’s base case at its price, and American Express, which its page prices level with its base value. Monster’s 7.0% is better than Costco’s and under the 8.5% I require.

The margin of safety

My margin-of-safety price is $23, 30% below my base value. At $23 even my bear case returns about 7.9% a year, close to the 8.5% I require, and the base returns about 10.9% C (calculated). A 30% cushion is what I use for a business this exposed to one category. The price is 106% above it. The stock last closed at or below $23 on 12 August 2024, $22.95, so it is a price the market has offered in the past two years, not a theoretical one.¹

Where this could be in 5 and 10 years

I want to know what the business could be worth later, not only now. The base case is worth $41 in October 2031 and $49 in October 2036 E (estimate), and the table shows the three cases.

For the base to stand at five years, net sales have to grow about 10% a year to 2031 and the operating margin stay near 29% E (estimate). For it to stand at ten, growth has to ease to 5.5% by 2036 while the business still needs only about 1.8% of sales in capital spending. The value rises less than 8.5% a year because the owner cash, $17 a share in the base, comes out along the way. The 3.8% a year is far below the 7.0% earlier on this page because it values the shares in 2036 at 8.5%, not at today’s 44 times earnings. It is close to the 20-times line in the table of multiples above.

Three numbers decide the spread: growth, margin and the discount rate. The bear lets growth fade to 3% and the margin fall to 24%, and it is worth $26 in 2036, less than the price even with $12 of cash. The bull has 14% growth easing to 7% and a 32% margin, and is worth $70. One point off the discount rate adds about $9 to the base today. The most likely way the base is wrong is the start: 12% growth in 2027 leans on currency and price that I cannot separate from volume, and a slower start lowers every later year.

These are estimates of value, not forecasts of the share price. The market price can sit above or below value for years.

VIIThe case for the price

What most people miss

First, Coca-Cola has not sold a share. Its 204,243,204 shares at 31 October 2024 are exactly six times the 34,040,534 it received in 2015, which is what two splits give, so its stake has changed only because Monster retired shares: 16.7% then, about 20.9% now C (calculated).⁷¹⁵² At the end of 2025 Coca-Cola carried the stake at $5.6B, with a market value of $15.7B.¹⁶ Second, the business needs very little capital: $132M of spending for $8.3B of sales in 2025.² Third, Monster’s sales per case fell 1.6% in 2025 while volume rose 13.3%, so growth came from volume, not from price.² Each of those makes growth cheaper and better than it looks.

The bull case

In plain words: energy drinks are still gaining buyers, Monster has the biggest distribution system in the category, and it makes a 29% margin while growing in double digits. The people who hold this view and have said so publicly about Monster are mostly its managers. In the second-quarter release of 6 August 2026, chief executive Hilton Schlosberg said the category continues to attract new consumers and raise household penetration.³ Monster’s December 2025 slides cite a GlobalData forecast of 8.0% annual growth in global off-trade energy sales to 2030, and show 13% of Monster Energy Company shoppers as new to the category.⁹ Those are the company’s own claims.

I looked for named outside investors with a stated view and found none I can verify. I searched the latest 13F filings of 27 managers, among them Altimeter, Atreides, Duquesne, Pershing Square, Berkshire Hathaway, Coatue, Tiger Global, ARK, TCI, Fundsmith, Baron and Markel, and none held Monster shares at the last quarter filed: 30 September 2026 for Markel and Egerton, 31 March for Pershing Square and 30 June for the rest.³³ Coca-Cola, the largest outside holder, reports its stake in its equity-method note and says nothing about price.¹⁶ Nasdaq’s consensus is a view of earnings, not value: $1.16 for 2026 and $1.32 for 2027.³⁰ I give no analyst targets because I could not source one from a primary document.

Against reality

Much of the bull case is true today. Volume grew 13.3% in 2025, the first half of 2026 was up 23.3%, and Monster gained 0.4 points of US dollar share in a year while the category grew 10.7%.²³⁹ My bull case gives it all of that and more: 14% growth in 2027 easing to 7%, and a 32% margin by 2036. That is worth $45 E (estimate). So if Monster does all that and hits its targets, it is a much larger business in 2036, with $26B of sales. It still does not reach $47.34 at 8.5%. The price needs net sales growth of about 13% a year at my base margins, against 11.8% in the last nine years, or a buyer in 2036 who still pays about 35 times earnings C (calculated).

So the honest version of the bull case at this price is about the multiple, as much as the business. Monster has been priced between 28 and 44 times earnings for a decade, so the multiple is not far out of line with its own history C (calculated).¹⁸ The risk is that the history was a time when growth was higher and rates were lower.

What a 10x would take. Ten times $47.34 is $473 a share, about $0.94T of market value on today’s share count C (calculated). At 30 times earnings that needs about $31B of net income, 14.7 times the last twelve months. At the 23% net margin Monster earns now, it needs about $136B of revenue, 14.7 times today’s and 2.8 times what Coca-Cola reported for 2025 C (calculated).³⁴²⁶ Red Bull’s turnover was EUR 12.2B.¹⁸ To do it in ten years Monster would need revenue growth near 31% a year with no fall in the multiple. Its own stock rose 3.9 times in the last ten years, from a market value near $29B, which was a very good decade for a company that size C (calculated).¹⁸ From $94B, tenfold is close to impossible, and I would not build a case on it.

Where I come down

The capital need and the stable Coca-Cola holding moved me: this is a business that turns sales into cash and that its closest partner has not tried to leave. The bull case did not move me on value, because even my bull falls short of the price. What would raise my values most is the operating margin rising to 31% or more with sales growth still above 10%, which would show that marketing spending buys durable share rather than just keeping up with Celsius.

VIIIRisks, and what would change my view

The three ways this goes badly wrong are at the start of Valuation. These are the rest.

• Aluminium and sugar. Gross margin fell from 63.7% in 2016 to 50.3% in 2022 as inputs rose.⁴⁵ The second-quarter 2026 release names higher aluminium can costs and freight against the price gains.³ Tariffs on cans or ingredients are a named risk.²
• Dependence on two bottlers. Coca-Cola Europacific Partners was about 15% of 2025 sales and Coca-Cola Consolidated about 10%.² Both have other brands to push.
• Leadership change. The founders have run the company for 36 years, the chairman is on a transition letter to the end of 2026, and the Americas chief is leaving for Coca-Cola.¹¹¹⁷ The next layer is experienced inside Monster but untested at the top.
• Impairments and the beer business. Impairments were $138.8M in 2024 and $53.7M in 2025 on beer sales of $134.7M.²
• Receivables. They rose 32% in 2025 against sales up 11%.² I do not know the cause.
• Rules and health concerns. The company lists caffeine limits, sales restrictions for young people, ingredient reviews, excise taxes and SNAP exclusion as risks, and they apply to a product that was 59% US in 2025 C (calculated).²⁹
• Currency. Foreign currency added about $138M to sales in the first half of 2026, so a stronger dollar would reduce both sales and margin.³
• Concentrated control. The founders and Coca-Cola together hold about 29% of the shares, and a bidder would need 62.5% of the others if Coca-Cola opposed.¹¹² Minority holders have little leverage.

What would raise my base value: the third-quarter release, expected on 5 November, showing sales growth near 15% with an operating margin of 29% or more and receivables falling in days.³⁰ What would lower it: a margin below 27%, a fall in Monster’s US share, or the Coca-Cola system taking its attention elsewhere.²