If you’ve been paying attention to the whole commotion about flavored e-cigarettes lately, you know that the Trump administration plans to ban most flavors, excluding tobacco. This has caused a rapid decline in MO (Altria) the past weeks as they own a 35% stake in JUUL.
We’re getting to the point. Alternatively, we believe that this will shift more people back towards smoking cigarettes. It’s been a widely known idea that many people switched to vaping as a matter of harm reduction, while still getting their nicotine high. Flavored E-Cigarettes provide an easier gateway in doing so as it makes smoking them more pleasant. Do you know people that’ve tried to quit smoking or say they’re “trying to quit”? Look at them now, and see whether or not they quit – chances are, they haven’t. We’ve experienced this through multiple people we know and assume its the same for others.
The numbers of $MO will even prove it as well. Their excessively high operating income with low expenses allow for a high dividend yield. Although $MO saw a sharp decline from the ban of flavored E-Cigarettes, $MO has started rallying up the end of the week of Oct 11. A deeper analysis of this would show that investors are even optimistic about Altria despite their 35% ownership in JUUL, which is about to suffer some losses with the recent ban. This shows that cigarette smoking will not stop.
Coincidentally, Altria has launched IQOS tobacco device in the U.S. The IQOS heats tobacco, but doesn’t vaporize it, which puts the device in a completely different category as E-Cigarettes like JUUL. There’s definitely something fishy going on. The release of IQOS is a positive for Altria, which definitely shows that there is a future in smoking tobacco, whether electronically or not.
If you’re a heavy proponent of smoking E-Cigarettes, let us know what you think regarding the ban of the flavored ones in the comments below. We’re interested in finding out everyones opinions on this and interested in what they’re about to do. Our bet is that they will go back to smoking cigarettes, which will lead to growth in Altria.
Another prediction for fun: we believe that kids (legal ages 18 and under or 21 and under depending on the state) will still continue to smoke either E-Cigarettes or plain old fashioned ones. Kids always want to fit in, and smoking is something that’s always been known to have a “cool” factor to it. Its also why drinking alcohol and smoking weed is so popular amongst teens. It seems to be even more so popular with teens and college students, and the trend is that we see a rapid decline due to people getting either over the “lifestyle” or their bodies not being able to handle all the liquor and being able to function properly the next day.