The Cigarette Industry is taking HUGE hits from growing Vape Industry! Learn how just the JUUL itself is killing the tobacco industry below!
Money Guru and “Mad Money” host Jim Cramer spoke about how vaping is on the rise and the cigarette companies are feeling it.
On an a segment of “Mad Money” host Jim Cramer made known that marquise stock prices have been dropping in the last week or so leading to the “worst day” in 10 years.
Cramer warned cigarette stock purchasers not to invest in cigarette stocks after other investors realized the industry faces an “existential” threat from the vaping industry.
Cramer spoke about the economic downturn for the cigarette industry after Altria, the parent company of Marlboro, saw a 16% decrease in its share prices.
A recession in cigarette volumes could most definitely mean more and more cigarette users are converting into vapes.
Cramer was quoted saying “we saw the market’s sudden recognition that the cigarette industry seems to be in serious trouble, disrupted by the rise of vaping.”
Altria has taken a hit from Citigroup financial analyst Adam Spielman after he moved the suggestion to buy their stock from “buy” to “neutral” coming after a weak earnings report.
Cramer went on to say, “Over the course of three short days, the tobacco stocks were bent, they were spindled and they were mutilated by the realization that electronic cigarettes have become a serious threat to the old-school cigarette makers.”, a great sign for the rising vaping industry.
Products such as JUUL have exploded over the last 6 months or so, leading to increased pressure on major cigarette corporations such as Altria.
Adam Spielman reported that 6% or so of the declined Altria stock can likely be credited to the JUUL itself. In the past tobacco icons have been seeing a 3-4% stock drop annually.
Handled by increasing prices on products does not seem like a viable solution any longer, because of the looming presence of vaping’s growing popularity.
PAX Labs creator of the JUUL has an increased growth of approximately 800% in 2017 alone.
The low wattage higher nicotine pod device has burrowed into the cigarette industry like no other electronic cigarettes before, paving the road for more devices to come.
Cramer stated “This thing (JUUL) is selling like crazy and it’s really eating into the tobacco industry in a way that other e-cigs never could.”
Some cigarette giants have moved into making their own electronic cigarette devices.
Moving away from the high profit sales of cigarettes and into a lower margin in the vape industry.
Companies such as Altria parent company to Marlboro have moved into the vape industry with their lack luster MarkTen.
More and more cigarette companies are making the same move but producing underwhelming devices.
Cramer discussed that “While the tobacco companies can get into the vaping business, their own vape pens tend to be money losers.”
Cramer concluded “Bottom line: last week investors realized, practically overnight, that the tobacco industry is facing an existential threat from its vaporizer competitors.”
With 2.3% decreases and Marlboro down another 7% Cramer then said “I think it could even have more downside.”