British American Tobacco share price: where next after US clampdown on vaping?
The tobacco company is set to release a trading update next week, with investors eager to see how US regulators' clampdown on vaping products will impact sales.
British American Tobacco (BAT) will release a trading update on October 15, with investors eager to see how US regulators' clampdown on vaping products will impact sales.
Over the last quarter, BAT’s rival Imperial Brands admitted that vaping and e-cigarette sales have ‘deteriorated’ due to increased regulation, with Massachusetts opting to temporarily ban the sale of e-cigarettes.
Interested in trading tobacco stocks? Open a demo or live account with IG
BAT adamant its vaping products are safe
Back in September, BAT insisted that its vaping products did not contain vitamin E acetate or tetrahydrocannabinol (THC), with both substances linked to respiratory-related illnesses that have caused the deaths of 11 people in the US.
‘Every single ingredient and component in these products has been scrutinised by our toxicologists for their suitability for vaping,’ BAT said in a statement.
‘From the FDA's statements we have seen, these tragic events appear to be a new phenomenon linked to liquids that were not sourced from reputable manufacturers and which contained ingredients, including THC and vitamin E acetate, which we do not use.’
BAT slashes thousands of jobs as it shifts to vaping
As the tobacco industry sees cigarette sales continue to decline, further driving its transition to next-generation products (NGP) like vaping and e-cigarettes, companies in the sector are looking to cut costs.
Last month, BAT announced plans to cut 2,300 jobs by 2020 as the company repositions itself to focus more on non-tobacco related products, while its rival Imperial Brands is looking to raise £2 billion from its asset divestment programme by May 2020.
Despite the myriad of challenges facing the company, BAT has performed relatively well compared with its peers, which is reflected in its share price rallying more than 13% since January. The FTSE 100 company has also outperformed the market, with the blue-chip index up 6% on a year-to-date basis.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get commission from just 0.08% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
