Vape Stock Market – Does It Pay Off To Invest?
By Ivan Srsen Posted April 25, 2018
Did you ever consider investing in vape stock? If you have, you might be interested to know that the vape market is projected to reach $47 billion by 2025. Although vaping was once considered to be a fringe activity, recent years have seen it gaining in popularity. With the increase in users, manufacturers, obviously, grew and expanded and today we have several e-cig companies that are publicly traded. However, their numbers are still negligible – it’s pretty difficult to find a vape-only stock that is secure and reliable.
There are two types of players on the market:
- Small cap vape players – small, independently owned companies; here we’re mainly talking about penny stocks that trade over the counter.
- The major players – tobacco companies whose primary product isn’t related to vaping and it’s actually in direct competition with it. However, they want a piece of the pie.
4 Reasons to Invest in Vape Stocks
Before I move on to vape companies and their stock, let’s take a look a few reason why you should consider this investment. Of course, these reasons apply to small, vape-only companies. Tobacco industry giants are showing a steady year-over-year growth that probably has nothing to do with the vaping market, making them a prime investment opportunity. Of course, that’s if you don’t have any moral qualms about investing in an industry that’s killed more people than the last 50 wars combined.
Market Steadily Growing
Right now, there are over 20 million vapers around the world. This is a very conservative number calculated by Vaping.com from the data provided by CDC and Euromonitor International. The actual number is probably considerably higher than that. Also, in 2015, the industry was worth $8 billion; in 2017, it was $11 billion – the growth is obvious and substantial.
It’s safe to say that vaping is here to stay. As younger generations embrace vaping as a suitable substitute for smoking, it might even have the potential of surpassing tobacco sales in not-so-distant future. Looking at this data, it looks like investing in vape stock is a good idea right now.
Marijuana Laws Less Stringent
The vape industry doesn’t only cater to smokers and ex-smokers. A growing number of manufacturers are creating vaporizers exclusively for dry herb vaping (as well as for various concentrates). As marijuana gets legalized in more and more countries, it’s reasonable to assume that the sales of dry herb vaporizers will go up.
An increasing number of users provides the manufacturers with an incentive to step up their game and invest more into the technology they are developing. They are putting out more and more versions of products on the market, effectively dangling shiny objects in front of vapers and making them spend money. It sometimes seems that a new vape product hits the market every month, at least. Of course, the FDA’s meddling did put a crimp into this so we’ll have to wait and see how things develop moving forward.
Although we’ve seen a considerable growth of the industry, unfortunately, there are very few vape-only companies that are publicly traded. Let’s take a look at a few of those whose core business isn’t strictly tobacco and which have a healthy mix of vaping and smoking products in their portfolio.
Turning Point Brands have a mix of smoking and smokeless tobacco products and their V2 electronic cigarettes are available all over the US. As of November 1st, 2017, Turning Point Brands value per stock is $17.48, which is not bad. If we take a look at their 5-year performance, we’ll see that that value has been slightly volatile but tending towards an upward trajectory. This makes them a sound investment for vapers who are looking for a cheap buy-in and a potential for growth in the future.
VAPE Holdings is a rare vape-only company that’s present on the stock market. They state that their company creates and markets vaporizers and other accessories geared toward the vaping market. However, they currently have only one brand in their portfolio and that’s Hive Ceramics.VAPE Holdings had a rocky year, with their CEO stating in April 2017 that: “We would like to assure shareholders that business is ongoing and we are working to get the public filings up to date, completing our debt consolidation as well as making key strategic decisions regarding both internal growth and external opportunities in the industry within which we operate.” Although optimistic, this statement doesn’t really inspire confidence when it comes to investing in VAPE Holdings stock.
Electronic Cigarette International Group was a strong competitor of VAPE Holdings in the past, as well as a large global distributor of vape products. However, as the above illustration shows, their stock took a nosedive last year. They recently published that their UK subsidiary, Must Have Limited, was placed under ‘administrative process’ for failing to pay $3 million in taxes.
Let’s hope that the financial landscape changes a bit in the next few years, giving us all an option to invest into vape-only companies with a bit more confidence. In the meantime, if you’re looking to make a quick buck, the Big Tobacco stock looks like a more lucrative option.
Big Tobacco Stock
Sadly, discussing vaping stock without mentioning these Big Tobacco companies isn’t really possible. Personally, I wish it was but seeing how they’ve injected themselves into everything vape-related, I would be remiss if I didn’t mention them.
Two most recognizable tobacco companies – PMI (Altria) and BAT, – now own some of the most popular e-cig brands in the world (RAI merged with BAT in the meantime, previously it was three largest companies). Although these are mostly cigalike devices, it pays to mention that they are what a majority of ‘casual’ vapers use.
Philip Morris International (Altria) stands to gain a lot thanks to its new IQOS, a device that uses tobacco sticks which are heated but not burned. They already applied with the FDA for a modified-risk designation, which means that they have plans to market it as a safer alternative to analog cigarettes. If they happen to get the designation (which would make them the second tobacco company to accomplish that), their stock will most likely go up considerably.Right now, PMI’s stock is around $103 and it’s in a slight decline. However, if we look at the historical data, it’s easy to notice that the value has been on an upward trajectory for at least eight years now. Since it doesn’t show any signs of slowing down, I would say that investing in PMI stock is always smart (although it does leave a bad taste in my mouth).
British American Tobacco recently finished its acquisition of Reynolds American, Inc, which made it the biggest listed tobacco company in the world. BAT was the first tobacco company to break into vaping when they released their Vype e-cig brand. RAI quickly followed with their Vuse cigalike. Before the merger, both companies were working on their own versions of HnB devices (Heat Not Burn) so we can expect that BAT be improving their glo device (released in Japan and 12 other countries) and adding elements of Core to it (a device that was being developed by RAI).As evident from the chart, the value of BAT’s stock has been increasing for the last 17 years. Judging from that, it’s a good, albeit unsavory, investment.
Should You Invest In Vape Stock?
I would be delighted if I could give you a firm ‘yes’ as an answer to this question. However, as things stand now, investing in vape-only companies is risky business. From a purely financial standpoint, an investment into vape stock is only sound if that stock is Altria or BAT. If you’re not risk-averse, there might be a few vape-only opportunities for you out there, but not too many. Hopefully, things will change in the future as vaping gains more momentum and stops being such a contentious topic.
Did you ever consider investing in vape stock? Let me know in the comments, especially if you know something more than I do, I would welcome the advice since I’m on the edge too (of course, when an opportunity arises). I’m pretty sure that other readers are interested too, so if you can chime in with something useful – we’re all ears!