Why Celsius Stock Is Up Today: Rockstar Founder Builds 4.7% Stake

Celsius shares are rebounding sharply after Rockstar founder Russ Savage disclosed a large stake in the company and publicly called for a management overhaul following yesterday’s disappointing earnings report.

Celsius Holdings stock is up about 12% Friday afternoon, significantly outperforming the broader market and partially recovering from its 18% decline on Thursday.

The most likely reason for today's move is not that investors suddenly changed their minds about Celsius' earnings.

Instead, something new happened.

Russ Savage, the billionaire founder of Rockstar Energy, told CNBC that he has accumulated more than 12 million CELH shares, equal to roughly 4.7% of the company. He also publicly called for major changes to Celsius' leadership and said he would be willing to take over as CEO himself.

That changes the situation investors are looking at.

Why Savage's involvement matters

Yesterday's earnings report raised legitimate questions about Celsius' execution.

Second-quarter revenue increased 10.6% year over year to $817.9 million, but came in well below roughly $870 million expected by analysts. Adjusted earnings of $0.36 per share also missed expectations, while revenue from the flagship Celsius brand declined 11.7%.

The stock fell 18%.

Savage is essentially arguing that at least some of these problems are fixable.

According to reporting on his CNBC comments, Savage believes Celsius has too many layers of management, excessive costs and not enough accountability. He said he has been advising the company on potential changes for more than a year, but believes management largely ignored his suggestions.

That carries more weight than criticism from a normal investor.

Savage founded Rockstar in 2001 and eventually sold the energy drink company to PepsiCo for roughly $4 billion. He knows the energy drink business, and he is now backing his opinion with roughly $300 million invested in Celsius.

The market does not have to believe Savage will actually become CEO for this to matter.

His involvement increases the probability that something changes.

Celsius could cut costs. Management could change its marketing strategy. The board could face greater pressure to improve execution. Leadership itself could eventually change. Or simply having a large, credible shareholder publicly criticizing management could force the existing team to move faster.

None of those outcomes are guaranteed. But yesterday investors were valuing Celsius largely on the assumption that the current management team would have to fix the problems itself.

Today there is another possible path.

The earnings problems did not disappear

I would still separate today's stock reaction from what actually happened fundamentally.

The Celsius brand remains under pressure. The company's Q2 revenue miss was real. Management is trying to manage a much broader portfolio of Alani Nu and Rockstar alongside Celsius while simultaneously dealing with weaker performance from its original brand.

Savage buying shares does not automatically fix any of that.

In fact, his criticism reinforces the argument that some of Celsius' recent problems may be execution related.

But that can also explain why investors are reacting positively.

A business suffering from structural brand deterioration is much harder to fix than a business with valuable brands that is being poorly operated. Savage is effectively making the second argument.

And after an 18% one day decline, the stock was already priced for quite a bit of bad news.

Even with today's roughly 12% rebound, Celsius shares remain about 8% below where they traded before yesterday's earnings selloff. So investors have not completely reversed their reaction to the quarter. They are simply assigning some value to the possibility that pressure from Savage could eventually produce change.

That distinction matters.

For Celsius investors, the next thing to watch is whether Savage's comments remain just public criticism or develop into something more concrete. A board push, additional shareholders supporting him, a formal strategic campaign or an actual response from Celsius would make today's development considerably more important.

For now, Celsius' underlying operating problems remain.

What changed today is the probability that someone may force the company to address them differently.