Monster Beverage Corporation – Ready to Risk with Short Trade?

If you like this idea, please don’t forget to Boost it.

Fundamental Indicators:

• Sector – Consumer Defensive
  
• US Business Cycle Stage – late cycle, when this sector is favourable
  
• Revenue – consistent growth for the past 10 years, 13% average annual growth rate for the past 5 years
  
• Profits – dropping since 2020
  
• Net margin – highly effective company for this industry with over 20% margin
  
• P/E – quite high with 39 ratio compared to S&P500 with 21 and Consumer Defensive sector with 23
  
• Liabilities - debt ratio is at 0.17 which is within normal limits, Net Debt/ EBITDA is negative – no problems with debt
  
• Conclusion – highly effective company, however, slowdown in profits, high PE and worsening economic situation – are the signs that the stock may correct further
  

Technical Analysis (Elliott Waves):

• Main scenario of this idea suggests that we are still observing development of the global growth cycle which is currently at the stage of wave 4 formation within an Ending Diagonal of a higher degree wave 5 (see higher timeframe graph)
  
• Since the correction after the Great Financial Crisis of 2008 the company has enjoyed explosive growth. However, from May 2018 when a Running Flat correction completed in wave 4, price movement has been very choppy with multiple crossings which is a good sign of an Ending Diagonal (see guidelines for Ending Diagonals below)
  
• The peak in August 2022 completed wave 3 of this Ending Diagonal and since then we can see a likely completion of the first leg of wave 4 in W and a deep correction in wave X
  
• The next wave may present a good shorting opportunity with a target of $65 below the high of wave 1
  

This is a higher timeframe to reflect the full history of Monster Beverage Corporation and to provide full wave count:

This is the link to the guidelines for Ending Diagonals

What do you think about Monster Beverage Corporation and its short term prospects?
Also let me know if you would like to see other stocks, indices, Forex or Crypto analysed using Elliott Waves. And BOOST this idea if you like it.

Thanks