Date:
17.2.2023
As usual, I started my day on a positive note – with a cup of coffee and cigarette. As I was sitting on my balcony and smoking, I got this crazy idea, that was in front of me for the whole time. I asked myself, how is one of the biggest tobacco companies doing? I ran to grab my laptop and opened the chart of Phillip Morris stocks. What immediately caught my eye was the volatility. Usually, I am not used to seeing this kind of fast rising and falling in stocks, but this one is different. I noticed that we are right after the rise, and for 10 or so days the stock is moving sideways, not going anywhere. If the history of price will repeat itself, the price should drop. But this is only based on technical analysis of the chart. As I consider myself as some sort of analyst, or let’s say I really do enjoy capital markets, I decided to quickly check the news, e.g., perform a fundamental analysis. Few clicks on the internet and I found a very interesting article – well, probably not so amusing for smokers in Mexico. Mexico decided to put ban on smoking on ANY public spaces. Imagine. That includes restaurants, beaches, etc. And I thought to myself, if a country with 126 million people puts a ban like this, it could have a bad effect on the price development of the stock. Scrolling forward, European Union decided to ban the advertisement of cigarettes. And that finally made sense. When I travelled to certain countries, all boxes looked the same. You could not recognize which brand is on the shelf from distance. And if that is not enough, many countries are constantly raising the tax on cigarettes, as they want people to stop smoking and/or not even start.
So, I found out the one side of a coin. Now off to the second one, I thought. Phillip Morris, despite all the bans and “sanctions” on tobacco products, they just don’t give up. They have invented a heating stick, called IQOS, which only “heats” and not burns the tobacco. It was a huge success for the company. Then they found out the trend was vaping, so they invented some kind of a vape, however that was not as successful. But marketing did a really good job and attracted many people to start smoking IQOS. It seems that company will bet more and more on their heating products, as war on cigarettes keeps improving. After I read all the important news, I went to check the charts again. The price of a stock in the beginning of the year was exactly the same as the one at the time of performing this technical analysis. The price currently is at 100,38 USD for a stock. Meanwhile, as I noticed volatility, it was not that bad as it seemed. At least this year. The highest price reached this year was 105 USD, while the lowest was 98,51.* After all the gathered info, I decided to short a stock for some time now and then decide to either long it or leave it at short. However, it is a stock that I need to keep my eyes on.
* Past performance is no guarantee of future results
Link to 5 year chart: https://www.investing.com/equities/philip-morris-intl