Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Been a rough few months for the former high flier Monster Beverage (MNST). Late this spring the stock briefly rocketed intraday to near $80 on a report Coca Cola would make a move to take the company over. (later disputed) Then the stock suffered along with the rest of the market May through July. A weak report smashed it mid August, and this morning a disclosure about the NY AG probing the industry of energy drinks for misleading practices hit the WSJ and is crushing the stock anew. I remember there being discussion of an AG probe mid August as well, so not sure why this is actually “new” news, but it shows what can happen to former momo names.
Via WSJ:
- New York’s attorney general is investigating whether the multibillion-dollar energy-drink industry is deceiving consumers with misstatements about the ingredients and health value of its products.
- Eric T. Schneiderman issued subpoenas in July to PepsiCo Inc. maker of AMP, Monster Beverage Corp., and Living Essentials LLC, maker of 5-hour Energy drink, according to a person familiar with the matter. The subpoenas asked for information on the companies’ marketing and advertising practices.
- The caffeine-heavy, carbonated beverages have become ubiquitous at grocery stores, gas stations and checkout counters across the country. Makers of the drinks, which are often sweetened with flavors such as grape or mixed berry, say they boost energy with a mix of additives including B-vitamins, taurine and ginseng.
- The New York probe is focused on whether the drink makers are misleading consumers with inaccurate labeling and advertising, according to the person familiar with the matter. The investigation is in the early stages and could expand to other companies, that person said. Investigators are examining whether the companies overstated the benefits of exotic-sounding ingredients while understating the role of caffeine, a common stimulant that industry critics believe to be the main active ingredient, that person said.
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