06:45 AM EDT, 08/08/2024 (MT Newswires) -- Monster Beverage ( MNST ) shares fell early Thursday as the energy drink company's second-quarter results fell short of Wall Street's estimates amid softening demand and consumer spending.

Net income increased to $0.41 a share for the June quarter from $0.39 the year before, the company said late Wednesday, trailing the Capital IQ-polled consensus of $0.46. Sales rose 2.5% year over year to $1.9 billion, missing the Street's view for $2.01 billion, with foreign-currency fluctuations having a negative impact of $67.7 million.

"The energy drink category in the US and in certain other countries experienced lower growth rates in the second quarter," co-Chief Executive Hilton Schlosberg said in a statement. "Retailers have reported a reduction in convenience store foot traffic and we have seen a shift at retail towards more mass and dollar channels."

Schlosberg added that other beverage and consumer packaged product companies have also seen weak demand in the quarter and "tighter" consumer spending.

Monster Beverage ( MNST ) shares fell 8.5% in premarket trading.

The Monster energy drink segment sales grew 3.3% year over year to $1.74 billion, while the strategic brands division advanced 9.6% to $109.2 million. Revenue in alcohol brands slumped 32% to $41.6 million due to decreased sales by volume of flavored malt beverages, according to the company. Sales to customers outside the US, which accounted for roughly 39% of total revenue, inclined 4.3% to $746 million.

Operating expenses rose to $492.3 million from $450.4 million in the 2023 quarter. "The increase in operating expenses were primarily the result of increased sponsorship and endorsement expenses, increased payroll expenses, and increased storage and warehouse expenses," co-CEO Rodney Sacks said on a conference call late Wednesday, according to a Capital IQ transcript.

Monster Beverage ( MNST ) does not believe its price increases have "significantly" impacted consumer demand, and is continuing to "monitor opportunities" for further pricing actions, Sacks told analysts. The company plans to increase prices in the US by about 5% for its core brands and packages, effective Nov. 1.

Monster Beverage's ( MNST ) planned price hike will not be able to lift its gross margins, Truist Securities said in a Thursday client note.

"With continued category weakness, the company will likely have to give all the benefit back in the form of promotions," the firm said. The brokerage maintained its sell rating on Monster Beverage's ( MNST ) stock with a price target of $46.

Price: 46.25, Change: -4.28, Percent Change: -8.47