Despite a Drop in Shares, PMI is Still Rolling in the Dough

The latest earnings report for Philip Morris International Inc. is in and PMI shares have plunged.

According to Bloomberg analysts, shares in the cigarette behemoth took a nose-dive to the tune of 18 percent after its latest earnings report showed that $4.5 billion spent on new products are failing to win over new customers. Products like the iQOS. A heat-not-burn device manufactured and marketed by Philip Morris as an alternative to traditional tobacco cigarettes, may not be as hot as previously thought.

Is Philip Morris drowning?

If Philip Morris is drowning, then you and I have already sunk hundreds of miles beneath the seabed into a massive reservoir of water. In short, PMI is doing just fine.

PMI reported revenue excluding excise taxes of $6.9 billion, less than the $7.03 billion projected by Bloomberg analysts. Despite dropping to $83.50 a share, the company’s largest decline in share price since the company split from Altria Inc., Philip Morris still has a market cap of $176.2 billion, according to Forbes.

Why the sharp decline?

The IQOS, Philip Morris’ heat-not-burn alternative to smoking has been introduced to 38 markets outside the United States. Nowhere on the IQOS page will you see the device marketed as an e-cigarette. This is to be understood as the cigarette giant looks to corner the market with its own cigarette alternative product.

Early success in Japan breathed optimism into the IQOS unit. However, sales slowed in the first quarter, proving it might not be so easy for smokers to quit cigarettes, after all, says Bloomberg.

Whoever said quitting was easy?

Whoever said quitting smoking was easy, probably never tried. Every year, 1.3 million smokers manage to successfully quit cigarettes. Though, I’m sure most will tell you that it was no easy feat.

Perhaps the reason IQOS sales have slowed is due, in part, to the device itself. Just saying…

According to Vaping360, a recent study published in the Journal of Tobacco Control concluded that vaping could save millions of lives if smokers switched from smoking cigarettes to e-cigarettes. Optimistic projections within the study showed that 6.6 million smokers could avoid premature death if 10 percent of the smoking population quits over each of the next 10 years.

Smokers are making the switch

Sometimes the grass is greener on the other side. E-cigarettes are that other side, according to many experts advocating for their deregulation. E-cigarettes have allowed millions of smokers to make the switch and reclaim their lives. Through continued innovation, research, and service to the consumer, the global e-cigarette market is poised to reach approximately $61.4 billion by 2025, according to Market Insider.

Especially relevant: last Thursday’s blog.

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Andrew Figgs

Photography Major from Western Washington University . I joined MBV back in December 2014 and am happy to be working in an industry focused on helping others.