Investors were less than enthused with the financial report for the first quarter of 2025 for energy drink company Celsius Holdings (CELH 4.31%). The stock initially dropped hard before bouncing back to where it had been. But nobody's expectations appear to be up after reading the report.

Nobody except me, that is. To be sure, Celsius isn't a risk-free investment, and I can understand some of the apprehension that other investors have. But I believe that investors are overlooking two great signs when thinking about the long-term upside with the company.

But first, the fear

In the first quarter, 93% of sales for Celsius came from North America. But sales in North America were down 10% year over year -- not exactly what you want to see from the third largest brand in the energy drink space, and a brand that is supposed to be taking market share away from the entrenched incumbents.

Image source: Getty Images.

There are other energy drink brands that are taking share at a faster rate than Celsius. One of those is Alani Nu. According to a presentation from Celsius, Alani Nu had 3.1% dollar share of the energy drink space in the first quarter of 2024, but it had 5.3% share in the first quarter of 2025. That's a huge jump.

By comparison, Celsius itself went from 12.3% share down to 10.9% share during this time.

Granted, Celsius has acquired Alani Nu for $1.8 billion, so that's encouraging. But be that as it may, it appears that top brand Red Bull is taking back some of this market, which isn't what Celsius investors want to see.

This is a huge contributing factor for the greater than 60% drop for Celsius stock over the last year.

Two things for long-term investors

Now that that's out of the way, allow me to highlight two things that excite me about the long term as a shareholder.

First, Celsius' profit potential is improving. You wouldn't know it by solely looking at the bottom line: First-quarter net income dropped 43% year over year to $44 million. But net income doesn't tell the whole story.

Further up on the income statement, companies show a metric called gross margin: the difference between a sale and the direct cost to make the product. In the first quarter, Celsius' gross margin improved by a whole percentage point to 52%, which is a continuation of the long-term trend.

In other words, the company continues to get its cost of goods down relative to its sales prices. This will support better profitability as the business scales up, and it's a really good sign for long-term shareholders.

The second good sign for long-term shareholders is Celsius' sales in international markets. The company is seeking to expand outside of North America and recently entered many new markets. In fact, this was a big reason its net income was down: It has elevated costs related to international expansion. But if it can grow its long-term opportunity, then it's a good use of money.

In the first quarter, net sales in international markets were up 41% year over year to $23 million. Granted, this is still a really small number. But it suggests potentially a decade or more of a top-line growth opportunity.

Not to mention, the Alani Nu brand is growing fast and has just passed $1 billion in trailing-52-week sales for the first time ever. There's room for Celsius to grow overseas but, given its quickly scaling business, Alani Nu will likely have a market outside of the U.S. as well.

In conclusion, Celsius stock is down, and investors seem disinterested. The fear is that after years of rapid growth, the brand is starting to lose its luster.

But I believe that's short-term thinking. Beneath the surface, margins are improving, and the company is still pursuing years of strong growth by expanding outside of North America and by acquiring Alani Nu, a brand that could have become a threat otherwise.

With these two major things going for it, I wouldn't bet against Celsius stock right now. I believe it will handily outperform the S&P 500 over the next five years.