SHOCKING DROP! British American Tobacco Shares PLUNGE 10% – What’s Behind the Dreadful Dip?
Hold onto your wallets! The tobacco titan British American Tobacco (LSE: BATS) has seen its stocks CRASH to a nail-biting £30 after the dreary 2024 financial results were unveiled on February 13. That’s a crushing 10% drop that’s left investors gasping for air!
But wait—before you start panicking, let’s look at the bigger picture. Despite this shocking plummet, British American shares are still riding high, up an impressive 25% over the past year. Will this dip be the golden ticket to snag an eye-popping 8% dividend yield? Let’s dive into the drama!
WHAT’S CAUSING THIS FREEFALL?
The first red flag is a jaw-dropping £6.2 billion set aside for a long-simmering class action lawsuit in Canada. This legal nightmare has been lingering for ages, but it seems we might finally be nearing a settlement.
But that’s not all! Australia’s regulatory shake-up and Bangladesh’s tax changes are predicted to send industry cigarette volumes spiraling down by 2% in 2025. Ouch! Expect British American to feel the sting too.
BIG PICTURE: DON’T COUNT THEM OUT YET!
Sure, the tobacco industry is always balancing on a knife’s edge with lawsuits and regulations. Declining cigarette sales are a bitter reality, yet British American continues to be a Goliath in this game, selling a staggering 505 billion cigarettes last year led by powerhouse brands like Dunhill, Lucky Strike, Rothmans, and Camel.
But here’s the kicker—despite its might, British American’s vaping sales took a hit last year, dropping 5.9%. They claim to hold a hefty 40% share of the world’s top vapor markets, but an illegal black market is causing havoc. Illicit vapes reportedly make up a shocking 70% of all sales in the U.S.!
The silver lining? It looks like law enforcement is gearing up to crack down on these rogue products. If that happens, the Vuse brand could easily reclaim its throne in the U.S. market.
BAT: THE ULTIMATE BUYING OPPORTUNITY?
This is the kind of business where calamities are lurking around every corner. However, these risks are no secret! And guess what? They’re likely already baked into the current share price.
Let’s not forget, this is still a MONSTER of a business! British American generated a staggering £7.9 billion in surplus cash last year—an astounding 12% of its current £67 billion market cap. That’s VALUE written all over it!
Plus, with a cash flow yield that comfortably covers its 8% dividend, the risk of cutting payouts looks slim.
Sure, these shares might not fit everyone’s portfolio, but if you’re on the hunt for bargain stocks with MEGA yields, British American Tobacco is one to watch closely! Will this dip be your golden opportunity? Don’t let this chance slip through your fingers!
