That's a huge impact to their market, and the cause? More than likely it is eLiquid's rise in popularity and the leg up of the vape industry in general. Pulling numbers from the S&P Global Market Intelligence; Altria, the U.S. seller of Marlboro, is down 18%; Philip Morris, the international distributor of Marlboro and other brands, has fallen 21%; and British American Tobacco, which sells brands including Dunhill and Pall Mall, is down 22%.
Philip Morris's revenue had estimates of just over seven billion USD, returning with an actual revenue six point nine billion. Altria shares sold off 6% on this news, as Altria has a research-sharing agreement with Philip Morris and could sell the iQOS in the U.S. if it were legalized. British American Tobacco, which also has moves in the works for vaping, lost 5% the same day. Bad news for traditional tobacco, great news for eLiquid manufacturers and the vape industry on the whole!
This industry wide sell off in response to Philip Morris' update on the iQOS shows just how much tobacco investors are counting on a successful transition to eLiquid and vapor products like vapes, smoke free set ups, and "heat-not-burn" devices to replace income from traditional combustible cigarettes and smokes.
Philip Morris also explained that the deceleration of the iQOS was in part because the company is focusing on converting an older customers to new devices, which to say isn't surprising from a survival standpoint. Vaping is clearly the winner here, eLiquids are the future market space that old tobacco is trying to pry it's grubby hands into.
To us, it's not surprising to see the old giant of profitability take this dive. The sell off was always on the horizon but now it has finally come to pass, and to investors it's clear that tobacco stocks are not a reliable steadfast as they once were.