At the end of January, Adam Spielman, a London-based managing director at Citigroup, made a suggestion to clients in an email: Buy stock in Altria, one of the largest cigarette producers in the world.
Altria's stock had been dropping for some time, after it decided to get in the vape industry by purchasing a sizable chunk of JUUL Labs in December 2018. Since that purchase, JUUL has faced a torrent of criticism and legal woes as a result of its marketing practices and eventually pulled most of its flavored pods off the market. Simultaneously, the broader industry has been grappling with a series of crises in the United States. Teenagers are still vaping at epidemic-like levels, and a mysterious spike in vaping-related illnesses dominated headlines before the federal government was able to pin the problem mainly on illicit THC cartridges.
But Spielman wasn't worried, and neither were a lot of other Wall Street analysts, according to MarketBeat, a prominent stock market news site. Many, like Spielman, have been recommending purchasing Altria stock in recent months even as JUUL's fate became increasingly tenuous.
"Cigarette volumes have been declining in the U.S. since 1983, and so far, profit has kept growing nicely," Spielman wrote in his email. "We do accept that growth will slow gradually, but we don't expect any sudden decline. In fact, we think that the decline of e-vapor means that the outlook is now better."
The logic in buying the stock was pretty simple: What is bad for the vaping industry is good for the tobacco market. When Altria paid for a portion of JUUL, it essentially hedged its bets; if vaping was the future, it wanted to be a part of it. The cigarettes weren't going anywhere anytime soon, though—and if some people stopped vaping, many of them could go back to, or even start, smoking cigarettes. Now that the vaping industry is in crisis, analysts have projected Altria's stock could eventually increase by as much as 22 percent.
Altria couldn't lose. But others could, specifically those people who had turned to vaping as a tool for quitting cigarettes and now face the possibility of having trouble obtaining e-cigarettes. Industry experts believe any future success for Altria's stock can be squarely pinned on the moral vape panic that has swept the U.S.
"The cigarette business has been a terrific investment over the 60 years since its product was shown to be the cause of an epidemic, and its sworn enemies have regularly engaged in activities that enhance its value," said David Sweanor, an adjunct professor of law at the University of Ottawa and an expert in the global tobacco market. "The ongoing attacks on any low-risk alternatives to cigarettes are one of the clearest examples, whereby abstinence-only anti-tobacco groups protect the cigarette cartel from disruptive technology and from product liability lawsuits."
It's a startling change from late 2018, when Altria originally bought its 35 percent stake in JUUL. Back then, Altria signaled that combustible cigarettes could one day be replaced by vapes, a new and potentially much safer technology. Its initial investment valued JUUL Labs at $38 billion, which at that time made it one the most successful startups in the country.
A little over a year later, that number currently rests around $12 billion.
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