Shares of Celsius Holdings (CELH -0.65%) fell 16% this week, according to data from S&P Global Market Intelligence. The upstart energy drink brand is facing a slowdown after a few years of monster revenue growth, and recently had a concerning report from the Wall Street Journal over its marketing practices. Nearly in a 50% drawdown, investors have suffered in Celsius stock this year, while the broad market has soared.

Here's why Celsius stock was down yet again this week.

Inventory buildup and shaky marketing practices?

Celsius is an energy drink that focuses on healthier lifestyles with its sugar-free and vitamin-boosted beverages. This has helped the company gain rapid market share in the United States, making it the third most popular energy drink that is gaining quickly on leaders Monster Energy and Red Bull. Revenue has exploded in recent years, hitting $1.4 billion over the last 12 months.

Last quarter, sales for Celsius still grew quickly at 37% year over year, but this was a big slowdown compared to 100%+ growth in prior quarters. Why did this occur? Because its distributor, PepsiCo, filled up its inventory too quickly in late 2023. Celsius revenue grows when Pepsi buys inventory from it, not when customers buy product at grocery stores and convenience stores. In prior quarters, the distributor bought a bit too much of Celsius inventory and is now slowing its purchases in 2024, which is causing a revenue growth slowdown.

Investors did not like this development and have sold off Celsius stock. To make matters worse, the Wall Street Journal just put out a comprehensive report on how young women with eating disorders are drinking energy beverages such as Celsius. While Celsius is probably in the clear, as it does not directly tell young people they can lose weight by drinking its product, having a report like this come out from a renowned newspaper is never a good thing.

The stock is still not cheap

Even after falling close to 50%, Celsius stock still has a premium earnings multiple. The price-to-earnings ratio (P/E) over the last 12 months is 54, which is around double the average for the S&P 500. Expectations for growth are still high for this brand, although not as high as earlier this year.

For anyone looking to buy shares of Celsius today, you need to be confident that revenue will continue growing at a double-digit pace for the foreseeable future. If that doesn't happen, the stock will likely fall farther from here.