Mad Money Host Jim Cramer Says Vaping Is To Blame For Cigarette Industry's Financial Woes

Jim Cramer, the host of “Mad Money” on CNBC, recently went on air and blamed vaping’s rise for a recent plunge in tobacco stock share prices.

By Cramer’s account, it was “the realization that electronic cigarettes have become a serious threat to the old-school cigarette makers” that caused tobacco stocks to get “bent,” “spindled,” and “mutilated” over the course of just three short days earlier this month.

“We saw the market’s sudden recognition that the cigarette industry seems to be in serious trouble, disrupted by the rise of vaping (…) Over the course of three short days, the tobacco stocks were bent, they were spindled and they were mutilated by the realization that electronic cigarettes have become a serious threat to the old-school cigarette makers.”

Prior to vaping’s rapid rise in popularity, cigarette volumes have historically fallen at a rate of between 3 and 4 percent per year and in response, cigarette companies have raised the cost of their products for consumers. In contrast with these historically fairly consistent rates, Nielsen data shows a 6 percent drop in cigarette sales in the first quarter.

Meanwhile, companies like Juul Labs, which makes the most popular e-cig in the U.S. market today, are witnessing rapid growth as the e-cigarette market continues to rise. In 2017 alone, Juul Labs saw their year to year sales grow by almost 800 percent, CNBC reported.

Summarizing his thoughts on the matter, Cramer said on “Mad Money” that the bottom line is that investors realized last week, “practically overnight, that the tobacco industry is facing an existential threat from its vaporizer competitors, led by Juul Labs.” He added that “while the group got obliterated last week,” he thinks that “it could even have more downside.”