Summary
- Altria's stock has been hammered ever since that infamous FDA announcement dating back all the way to the summer of 2017.
- A shocking outbreak of vaping-linked respiratory disease cases as well as an FDA crack down on JUUL Labs have pushed Altria's shares to record yield levels.
- Investors are heavily concerned that Altria's glorious past may not be repeated and that the dark night for the company has only begun.
- Income investors can make a fortune with the stock in case Altria manages to weather the storm and lead through that painful period of evolution.
Altria (MO), the leading U.S. cigarette manufacturer, once the darling of dividend investors, has come under enormous regulatory pressure causing a massive sell-off in the stock and leaving investors guessing if this is the beginning of the end or just another brilliant long-term buying opportunity for courageous investors.
Source: Altria Investor Relations
Ever since the FDA delivered its infamous directive to aggressively curb nicotine levels in cigarettes, Altria's stock has been trending down strongly. While in the past investors were only concerned about declining cigarette volumes, the situation has completely changed with Altria betting a substantial part of its future on its highly controversial $12.8B 35% stake in JUUL Labs.
JUUL itself has now come under intense pressure from society, the FDA and even Trump following the unfortunate and tragic death cases of teenagers linked with vaping.
Overall, Altria is now in deep trouble. Not only is its traditional cash-cow combustible cigarette segment under pressure but also its biggest ever investment in JUUL is more than just hanging in the clouds. It is not yet an existential crisis for Altria but assuming the FDA continues to crack down on JUUL, multi-billion dollar write-offs of Altria's stake in JUUL may herald Altria's Dark Night and send down shares to levels not seen since the Great Recession.
