MORGAN STANLEY: A startup valued at $15 billion is singlehandedly reviving the e-cig market, and Big Tobacco … – Business Insider

$15 billion for a startup that makes e-cigarettes would have been laughable several years ago. That was before Juul Labs, the San Francisco-based company behind America’s most popular vape pen, put its device on the market.

The lofty valuation came last week as part of an announcement that Juul was raising $1.2 billion for an overseas expansion.

Users — some of them former smokers — swear by the devices, known as Juuls, because they pack a powerful nicotine punch.

Teens love them too. It’s a trend that terrifies public health experts who say teens are attracted to the Juul’s fruity flavors and discrete appearance. Not surprisingly, the Juul has rocketed into first place as the most popular vape pen in the US, having generated a whopping $224 million in retail sales between November 2016 and November 2017 and snagging a third of the total e-cig market share.


Beyond driving sales, however, the Juul may be singlehandedly resurrecting the e-cigarette market, which had been slumping since roughly 2014 as the devices failed to satisfy smokers.

In a recent research note, Morgan Stanley analysts credited the Juul with “driving a revival in the US e-cig market,” adding that sales of the Juul “accounted for almost the entire incremental increase in US e-cig sales as a percent of total cigarette and e-cigarette sales in the last year.”

‘A growing headwind to US cigarette volumes’

Shutterstock The Juul is doing so well that it is even starting to encroach on Big Tobacco’s terrain, the note said.

“We believe JUUL has become a growing headwind to US cigarette volumes,” the analysts wrote.

That’s a concern echoed by Citigroup analysts back in April, when they warned investors in traditional tobacco stocks like Philip Morris and Altria to be mindful of the extent to which the

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