SHARE OF THE WEEK: BAT hit as investors spooked by vapes backlash
SHARE OF THE WEEK: British American Tobacco has lost nearly a quarter of its value this year – investors spooked by vape backlash
Shares in British American Tobacco have lost nearly a quarter of their value this year – with investors frightened by a backlash against vapes.
Regulators on both sides of the Atlantic have raised concerns about tobacco alternatives amid calls to ban flavored products.
This is a blow to those like British American Tobacco, who are on a mission to move away from cigarettes and into “next-generation products.”
To make matters worse, the maker of Marlboro and Benson & Hedges was recently fined £508 million for circumventing sanctions for selling to and trading with North Korea between 2007 and 2017.
This caused the stock to plummet and CEO Jack Bowles announced his sudden departure. He was chief of Asian operations at BAT during part of the period under US authorities’ surveillance.
Russ Mold, investment director at AJ Bell, said this is “not a pretty picture” for new chief Tadeu Marroco, who leads a trade update Tuesday.
Marroco must now put the North Korean fiasco behind the company, improve momentum in next-generation products and anchor BAT’s competitive position in tobacco so it can continue to generate cash, pay out big dividends, reduce borrowing and may resume share buybacks,” he said.
Investors will likely seek reassurance about the prospect of US laws as the Food and Drug Administration looks at menthol and flavored cigarettes.