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Celsius Holdings stock is under pressure this week as Wall Street weighs whether Costco Wholesale's decision to launch an inexpensive energy drink could negatively impact demand for Celsius products.

As of Thursday's close, Celsius stock is down in five straight sessions, losing about 17% over that period. The steep decline comes amid Costco releasing a line of energy drinks under its private label Kirkland Signature -- with similar flavors and packaging that bears a striking resemblance to Celsius products, but at a 55% discount.

Costco also happens to be a major distributor for Celsius energy drinks, with the retailer accounting for about 11% of Celsius' total revenue last year.

"We're aware of the launch, and it does not change our conviction in the broader Celsius growth story, our execution priorities, or our long-term strategy," a Celsius spokesperson told Barron's Thursday.

The spokesperson added that "a value-priced private-label launch can get trial, but it is too early to conclude that trial becomes durable switching in a highly brand-led energy category."

Celsius stock was in positive territory for parts of Thursday, but ended the day down 0.9% to $35.59. The stock is also now down 33.6% in March, and is on pace for its worst monthly performance since January 2022, when it sank 36%, according to Dow Jones Market Data.

"While the introduction by a major customer of a competing product is not a good development, we believe the dramatic drop in the share price is overdone," analysts at Roth Capital Partners wrote Thursday.

The firm noted the Costco appears to be limiting the launch to "certain markets" and that Kirkland Signature products are only available at Costco. Roth has a Buy rating on Celsius with a $67 price target.

A team of TD Cowen analysts led by Robert Moskow broadly concurred with this view on Wednesday. TD Cowen also has a Buy rating on Celsius along with a price target of $66.

"The sell-off looks like an overreaction," the analysts wrote. "We view the pullback as a buying opportunity given strong distribution tailwinds in 2026."

More broadly, Costco's decision to release its own energy drink product, and the market response, is the latest example of how the retail giant can threaten other companies.

Costco, leveraging its membership-based model and high-volume warehouses, can sell products at razor-thin margins that many companies can't compete with when it comes to pricing.

Costco did not immediately respond to a request for comment.

Mizuho analyst David Bellinger on Wednesday wrote that Costco, with its in-house dog food, has recently put pressure on Freshpet. Separately, Kirkland earlier this year partnered with Nike on $134.99 sneakers that are now re-selling for more than $500, according to Mizuho.

"Single product launches aren't enough to move the needle for COST, yet the power of the $90 billion global Kirkland Signature brand is as strong as ever. Value wins, time and again -- particularly in an environment characterized by high price levels, sticky yet moderating inflation, and fragile sentiment amid gas price swings," Bellinger wrote.

Costco stock rose 0.5% to $979.65 on Thursday, with the stock up 13.6% so far this year.

Write to Kit Norton at kit.norton@barrons.com

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