The shares of Monster Beverage Corp (NASDAQ:MNST) surged by nearly 17 percent, to $48 per share during the afternoon trading on Wednesday, as the company issued a statement that strongly defended the safety of its energy drink, in response to reports that a 14-year old girl possibly died after drinking two cans of Monster Energy Drink within in one day.
The parents of the girl, identified as Anais Fournier, filed a lawsuit against Monster Beverage Corp (NASDAQ:MNST) that triggered an investigation from the United States Food and Drug Administration (FDA).
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Shares of Monster Beverage Corp suffered a significant decline on Monday. The stock closed yesterday at $41.08 per share.
In a statement, Monster Beverage Corp (NASDAQ:MNST) expressed sympathy to the family of Anais Fournier. The company also emphasized that its products are not the cause of the girl’s death, and it “intends to vigorously defend the lawsuit.”
Monster Beverage Corp (NASDAQ:MNST) also pointed out the company sold out tens of billions of energy drinks, including 8 billion cans of Monster Energy drink, and people consumed the products safely for the past 25 years, worldwide. According to the company, it is not aware of any death caused by its products anywhere in the world, based on its consumer communications monitoring.
The company also said that Monster Energy Drink has 240 milligrams of caffeine from all sources, 30 percent less than the average caffeine present in a 16-ounce cup of house brewed coffee.
In addition, the company pointed out that Monster Energy drinks are in full compliance with all the laws and regulations of more than 70 countries where the products are sold.
Furthermore, the company emphasized the statement from the FDA, “adverse event reports about a product do not mean that the reported event is caused by the product”, as well as the clarification from the FDA that it “has not established any causal link between Monster Energy drinks and reports it has received.”
The FDA is investigating several cases related to death associated with drinking energy drinks. Last August, New York state Attorney General Eric Schneiderman, launched an inquiry against energy drink manufacturers. Legislators also asked the FDA to find out the effects of caffeine and other ingredients in energy drinks on children and teenagers.
Stifel Nicolaus downgraded its rating on the stock of Monster Beverage Corp (NASDAQ:MNST) from “buy” to “hold”, but the reason was not related to the lawsuit against the company. The downgrade was due to expectation that the company will suffer a greater-than-expected decline of sales growth towards the first quarter of 2013.