Altria stock prices climb after surrendering to FDA flavor ban
During the last week of October 2018, the Big Tobacco conglomerate Altria made a rather startling decision to pull all flavored vape products from store shelves effective immediately. The action was seen largely as a move to placate the U.S. Food and Drug Administration (FDA) and its unyielding barrage of negative public statements classifying teenage vaping as a national epidemic.
In a press release, Altria executives announced that MarkTen and Green Smoke cigalike products would be disappearing from store shelves until the FDA could approve its pending Pre-Market Tobacco Application (PMTA). Since regulatory requirements for the PMTA approval process are still in the preliminary stages of development, a PMTA approval for Altria could theoretically take years.
Related Article: Marlboro maker Altria caves to FDA; stops selling flavored vapes
The Altria decision led to massive speculation within political circles as well as the vaping community at-large. Would other vapor companies like Juul follow suit? Or was the controversial action by Altria just a clever business strategy designed to take the FDA-induced heat off of The Altria Group temporarily while shining an even brighter spotlight on its competitors? Or was there something else secretly going on behind the scenes? Everyone wanted to know: Why was Altria seemingly caving to the FDA?
Altria stocks reach 8-month high directly following controversial announcement
Altria is a member of Big Tobacco. Juul and its other vape competitors are usually not. Altria has both the deep pockets and the political cloud to wait things out until such time that the FDA goes on to some other conspiratorial endeavor.
In the meantime, the Altria organization has another gig to fall back on – namely, the decades-old selling of conventional combustible tobacco to millions of cigarette-addicted Americans. Altria’s subordinate company Phillip Morris is the manufacturer of one of the world’s most popular cigarettes, Marlboro, as well as the long-popular brands of Chesterfield, L&M, Merit, Virginia Slims, and others. Furthermore, the recent move by Altria to surrender to the FDA and stop selling e-cigs is also be proving to be a bit of a financial windfall showing itself in a less-obvious way - rising stock prices.
Investopedia reports that in the five days following the October 25 announcement by Altria, stocks soared to an 8-month high or about eight percent by October 30. Expert traders suggest that the possible link between Altria’s pulling of vape products and the sudden surge of stock prices may be more than a mere coincidence.
At the time of the October 25 announcement, Altria stocks were already heading into bullish territory by way of a “golden cross” scenario which occurs when the 50-day moving average crosses over the 200-day moving average. In the world of stock trading, a golden cross is a very rare occurrence, and they usually precede a massive spike in stock price. The Altria announcement may have been the perfect catalyst needed to finally push stock prices towards that ever-elusive golden cross confirmation, allowing both The Altria Group and its stockholders to laugh all the way to the bank.
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