Monster Beverage shares slide amid lawsuit

One of its energy drinks is cited in a 14-year-old girl's death.

By Jason Notte Oct 23, 2012 4:24PM

Monster Beverage (MNST) investors are getting jittery, and not for their usual highly caffeinated reasons.

The company's shares have lost more than a quarter of their value in the past two days after the Food and Drug Administration confirmed Monday that it had received "adverse incident reports" of five deaths involving Monster energy drinks. The New York Times first drew attention to the reports, which were requested under a Freedom of Information Act filed by the mother of a 14-year-old Maryland girl who died in December from heart problems after drinking Monster Energy on two consecutive days.

A lawsuit filed by Anais Fournier's parents in California Superior Court on Oct. 17 alleges the girl drank two Monster Energy beverages that contained a combined 480 milligrams of caffeine, equivalent to about 21 8-oz. servings of Coca-Cola (KO) or 19 8-oz. servings of Pepsi (PEP). According to Bloomberg, the Maryland medical examiner’s office determined the girl’s cause of death to be from "cardiac arrhythmia due to caffeine toxicity."

The FDA says it hasn't found a link between Monster Beverage drinks and the reported deaths, but is still investigating.

Though Monster Beverage issued a statement last Friday saying it was was "saddened" and vowing to vigorously defend itself, investors don't seem comfortable waiting around for the result. The company's share price dropped 14% on Monday and more than 11% on Tuesday despite Monster's strongest rebuttals.Image: Arrow Down ( ImageSource/PictureQuest)

"Monster does not believe that its beverages are in any way responsible for the death of Ms. Fournier," the company said. "Monster is unaware of any fatality anywhere that has been caused by its drinks."

This likely isn't going to be an isolated jolt for Monster, either. The company is named in five adverse incident reports to the FDA this year and 37 overall since 2004. That's making the FDA reconsider its stance on energy drink caffeine limits, which could also spell trouble for Red Bull, 5-Hour Energy and other "energy" products.

The FDA already has restrictions in place for soda, and limits caffeine content to 71 milligrams per 12 ounces to be considered safe. The 24-ounce Monster drinks cited in the lawsuit contain almost seven times that much caffeine, but exploit a loophole in the FDA's caffeine guidelines, labeling themselves "diet supplements," to avoid the limit.

They're often found in the same convenience store coolers and grocery aisles as soda, but Monster relies heavily on its labels to let folks know the drinks are "not recommended for children and people who are sensitive to caffeine."

Funny, since researchers at Johns Hopkins University have been calling for FDA-mandated labeling of energy drinks since 2008. This fight is seldom solved with a label, though. Anheuser-Busch InBev (BUD) and MolsonCoors (TAP) each pulled caffeine-spiked alcoholic energy drinks from the market in response to lawsuits. The makers of the alcoholic energy drink Four Loko were only able to overcome a scolding from the FDA bans in several states by pulling caffeine, taurine and guarana out of its formula and taking "energy drink" out of its description and title.

The accusations against Monster are far more severe and could result in major changes to the energy-drink industry regardless of outcome. Investors rarely enjoy being part of such test cases and may not stick around to see how this one turns out.

More from Top Stocks



Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123 rated 1
262 rated 2
480 rated 3
651 rated 4
649 rated 5
629 rated 6
616 rated 7
496 rated 8
346 rated 9
111 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.