Celsius shares have surged 16% in a month amid activist calls for leadership change, but Jim Cramer now prefers Coca-Cola, citing recent earnings disappointments and margin pressure at the fast-growing energy drink maker
Jim Cramer's latest pick on CNBC's Mad Money Lightning Round has drawn attention from investors weighing the risks and rewards in the beverage sector. On August 20, 2026, Cramer made it clear he now prefers Coca-Cola over Celsius Holdings, even as Celsius stock has been on a sharp upward run. The shift comes at a time when Celsius shares are up about 16% in the past month, fueled by an activist investor campaign to overhaul company leadership.
For investors, the timing of Cramer's reversal is notable. Just months ago, he had been bullish on Celsius, favoring it over Monster Beverage and highlighting its rapid market share gains. But after a disappointing second-quarter earnings report, Cramer's stance has changed. He now points to Coca-Cola's steadier performance, reliable dividend, and long track record as reasons for his preference.
Mixed Results for Celsius
Celsius reported second-quarter revenue of $817.9 million on August 6, up 10.6% from a year earlier but well below analyst expectations of roughly $886 million, according to Investing.com. Adjusted earnings per share came in at $0.36, missing Wall Street's $0.43 estimate. More concerning for some investors, sales of the flagship Celsius line fell 11.7% year over year, and gross margin dropped to 48.1% from 51.5% as the company increased promotional spending and shifted its sales mix.
While Celsius has been integrating new brands like Alani Nu and Rockstar, these efforts have added short-term costs and further pressured margins. Alani Nu, however, delivered $364.4 million in second-quarter sales, up 21% from the prior year, showing that acquired brands are still growing even as the core Celsius product faces headwinds.
Coca-Cola's Steady Appeal
In contrast, Coca-Cola posted a strong quarter, with adjusted earnings of $0.97 per share on July 28, beating analyst expectations of $0.93. Revenue rose 7% to $13.38 billion. The company's consistent dividend, which has increased for more than 60 years, and its ability to weather market volatility make it a classic defensive pick for cautious investors. Cramer's move toward Coca-Cola reflects a broader market sentiment that now favors stability and income over high-growth but volatile stocks.
Market data shows that while Celsius has delivered rapid growth in recent years, its valuation has become more sensitive to earnings misses and operational setbacks. Several Wall Street firms, including JPMorgan and Stifel, cut their price targets for Celsius after the latest results, with JPMorgan moving to $56 from $70 and Stifel dropping to $45.
Activist Pressure and Volatility
The recent rally in Celsius shares has been driven less by fundamentals and more by speculation around a potential management shakeup. Russ Savage, founder of Rockstar Energy, disclosed a stake worth about $300 million and called for new leadership, including the removal of the current CEO. The stock jumped roughly 12% on the day this news broke and has held much of that gain since. This kind of headline-driven volatility can create both opportunity and risk for investors, especially when the underlying business is still working through integration challenges and margin pressure.
For those holding or considering Celsius, the key issues are whether the core brand can recover its growth trajectory and whether activist efforts will lead to meaningful operational improvements. Until there is evidence of a turnaround in flagship sales, the stock may remain highly sensitive to news and investor sentiment.
What Investors Should Watch
Investors evaluating Celsius now face a classic trade-off: Coca-Cola offers slower but steadier growth, a reliable dividend, and less volatility, while Celsius presents the possibility of a rebound but with greater risk and uncertainty. The company's integration of new brands is ongoing, and the activist campaign adds another layer of unpredictability. For those considering a position, it's important to monitor sales trends in the core Celsius line and track developments in the boardroom as the activist fight unfolds.
Recent events in the beverage sector echo broader trends seen in other industries, where companies facing margin pressure and activist campaigns can experience sharp swings in valuation. For example, as seen in coverage of Xiaomi's profit squeeze from rising memory chip costs, operational challenges and shifting investor expectations can quickly reshape market sentiment and stock performance.
Ultimately, Cramer's shift away from Celsius is a reminder that even fast-growing companies can fall out of favor when earnings disappoint and uncertainty rises. Investors should weigh their own risk tolerance and investment goals before making decisions in this volatile segment of the market.
Dividend stocks like Coca-Cola are often favored in uncertain markets because they provide a stream of income regardless of short-term price moves. Growth stocks such as Celsius can deliver outsized returns when business momentum is strong, but they are also more vulnerable to earnings misses and competitive threats. Understanding the trade-offs between stability and growth is essential for building a resilient investment portfolio, especially when market sentiment can turn quickly on new developments or activist campaigns.
