Coronavirus is going to crush tobacco stocks

by whimbrel

  1. This virus is going to be everywhere. There is no containing it at this point. Seattle urgent care doctors are reporting seeing patients that they are fairly sure have coronavirus, but because the only testing done is at the ER/hospital, there is nothing they can do to contain these patients except send them home and suggest they self-isolate. No followup is being done on them or their contacts.
  2. Death rates in China are largely in the elderly, and they’re largely in men (2.8% in men vs 1.7% in women). Why elderly? Because everything is more lethal in elderly people for reasons that I’m not super-interested in explaining here. Why men? This is more interesting. Usually, it’s partly due to differences in immune responses based on estrogen, but this doesn’t apply much to elderly women. It’s also in part to behavioral differences. One *giant* one is that 50% of Chinese men smoke and 2% of Chinese women smoke. And the lethality rate seems to be significantly higher in smokers.
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I think a very real possibility is that two things are about to happen in the US.

  1. A bunch of old chain-smokers are going to die. They were going to die anyway, but now it’s going to happen abruptly.
  2. People are going to realize the virus is everywhere, that people who smoke are disproportionately needing mechanical ventilation or coffins, and they’re going to *freak the fuck out*. Lung cancer is scary but that happens to future you in like 30 years. Coronavirus is going to happen to you RIGHT NOW.

Neither of these two things is going to be good for tobacco demand.


EDIT: All the people saying “but it’s an addiction! People would quit if they could! Blah blah blah!” — I get it. I still think you’re going to see a switch to patches/gum for people who don’t want to risk their lungs with coronavirus going around, which isn’t great for Philip Morris and is great for… whomever.

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The bigger thing here, though, is here:

Death rates by pre-existing conditions for 72,314 confirmed, suspected, and asymptomatic cases of COVID-19 in China as of Feb. 11

Cardiovascular disease – 10.5%

Diabetes – 7.3%

Chronic respiratory disease – 6.3%

Hypertension – 6.0%

Cancer – 5.6%

no pre-existing conditions – 0.9%

What do most old smokers have? CVD, respiratory disease and hypertension. There are going to be a shitton of dead old smokers not buying cigarettes any more. If you think that won’t affect the stock price… go long, I guess.




Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.