Reuters: Global Markets: Monster Beverage shares fall on state AG investigation

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Monster Beverage shares fall on state AG investigation Aug 10th 2012, 15:49 Fri Aug 10, 2012 11:49am EDT (Reuters) - Monster Beverage Corp (MNST.O) shares fell 8 percent on Friday, a day after the beverage maker said its namesake energy drink was being investigated by a state attorney general. The disclosure, made late on Thursday in a filing with the Securities and Exchange Commission, extended a 10 percent drop the shares experienced on Thursday, after Monster reported disappointing earnings on Wednesday. In its filing, Monster said it received a subpoena in July from an unspecified state attorney general in connection with its ingredients and advertising, among other things. And Monster may not be alone, according to two analysts who said they understood that other energy drink manufacturers received similar subpoenas. Officials at makers of other energy drinks, including Red Bull, 5-Hour Energy and Rockstar, were not immediately available to comment. Nor were spokesmen for Coca-Cola (KO.N) and PepsiCo Inc (PEP.N), which make the Burn and Amp energy drinks, respectively. Dr Pepper Snapple (DPS.N), which makes the Venom energy drink, said it has not received any subpoena. "Given the generic nature of the subpoena, rather than focusing on ingredients, or marketing or promotions, we believe it is more of an information gathering mission," UBS analyst Kaumil Gajrawala wrote in a client note. He added that he does not expect any long-term impact on the company but noted that details are still sparse. This is not the first time attention has been paid to energy drinks. In April, Senator Dick Durbin sent a letter to the Food and Drug Administration calling for an investigation following the death of a teenager. "We believe the disclosure of the investigation is negative for Monster shares as it will likely increase scrutiny of the energy drink category, which could impact company sales growth," Stifel Nicolaus analyst Mark Astrachan wrote in a research note. Monster's quarterly results missed analysts' estimates as product damage hurt its launch in Japan and South Korea. The company's shares were down $4.87, or 8 percent, at $56.33 on the Nasdaq. Coke and PepsiCo shares were each down less than 1 percent, while Dr Pepper shares were up slightly. (Reporting by Martinne Geller in New York and Arpita Mukherjee in Bangalore; Editing by Steve Orlofsky) Link this Share this Digg this Email Reprints

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