- IQOS is Atlanta had a 0.9% share of the market there in the third quarter, up from 0.6% in the second quarter. We're obviously still talking very small numbers, but there is progress. The in-store advertising in Charlotte now promotes the MRTP designation given by the FDA.
- The FDA received thousands of PMTA application ahead of the September 11th deadline which they will now have to process. There are many that lack any semblance of data to support their claims, and will ultimately get rejected, but it will take time to weed them out. Also, MO states that there are numerous products still being sold that never even bothered to file a PMTA. The FDA is supposedly going to eventually start circulating a list to retailers of what products are still legal (i.e. have at least filed for a PMTA), but it is unclear exactly when that will happen, or how the FDA plans to enforce this if stores still carry illegal products.
- The write down of JUUL to $1.6 billion is largely a legal and accounting exercise. However, I would note if that actually is what MO feels the longer term value of JUUL is, they are better off selling it. At around a 24% corporate tax rate (federal + state), MO would generate a capital loss of $11.2 billion if they sold it for that ($12.8 billion invested - $1.6 billion sale price). That $11.2 billion loss would save them $2.7 billion in income taxes, conceivably more than they would ever recoup from JUUL. With the lockup period of their BUD shares ending October 2021, it might make sense, especially given the tax implications, to dump both and offset the gain from BUD with the loss on JUUL.
- They feel their stock is undervalued, but share buybacks won't be restarted with COVID pandemic is going on. Admitted JUUL has been a disappointment and the market has lost confidence in MO, but feel they can regain it by delivering consistent profits from their cigarette and moist snuff businesses as they transition to next generation products.