Keurig Dr Pepper Stock Slides After It Misses Sales Estimates, Buys Energy Drink Maker

Keurig Dr Pepper (KDP) shares fell Thursday after the coffee and soft drink company posted worse-than-expected sales and announced it was purchasing energy-drink maker GHOST Beverages in a deal that could end up worth more than $1 billion.

The owner of the eponymous soda brand reported third-quarter revenue rose to $3.89 billion, while analysts polled by Visible Alpha were looking for $3.92 billion. Diluted earnings per share was in line with estimates at $0.51.

U.S. sales of its coffee products declined 3.6% to $976 million on falling prices and lower demand for its K-Cup pods. U.S. Refreshment Beverages unit sales were up 5.3% to $2.39 billion, and international sales were basically flat at $525 million.

The company’s stock was recently off more than 5%, though still in the green for the year so far.

CEO Tim Cofer said that Keurig Dr Pepper faced a “muted operating environment.” The acquisition of GHOST was another step in the company’s multi-year strategic agenda, he said, “accelerating our portfolio evolution toward growth-accretive and consumer-preferred spaces.”

The deal has Keurig Dr Pepper paying $990 million initially for a 60% stake in GHOST, and it will pick up the remaining 40% in 2028 “at a pre-negotiated valuation scale that will reflect GHOST’s 2027 financial performance.”

The company noted that starting in the middle of next year, it plans to invest $250 million to transition GHOST’s existing distribution agreements to Keurig Dr Pepper’s direct store delivery network.