Next Investors logo grey

Stocks fall on vape crisis

Published 08-OCT-2019 10:20 A.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

The share prices of publicly listed vaping companies have been dragged down recently, following the outbreak of respiratory illnesses in the United States.

Read: Will the Vape Crisis Kill Canada's Legalisation 2.0?

There is no direct link between the illnesses and companies selling vaping products, however 800 people falling ill and 16 people dying has the industry under fire.

The Centers for Disease Control and Prevention’s (CDC) recent report on the issue, suggests that marijuana products from the illicit market are likely to be the main culprit of the vaping illness epidemic.

Regardless of blame, stocks in this market have been hard hit.

California-based vaporiser distributor KushCo Holdings (OTCMKTS: KSHB) has experienced a share price decline from US$3.75 at the end of August to US$1.48 as of September 30. The price had edged back to US$1.69 as at 8 October.

Seaport Global lowered revenue expectations for KushCo in 2020 by 14% as a result of the current crisis and by a further 4.5% in 2021.

Vancouver-based Vapen MJ Ventures (CNSX: VAPN) saw its stock price tumble in September from a high of 1.80 Canadian dollars on 3 September to CA$0.82 as of 30 September. It is currently CA$0.94.

Another Vancouver-based company, 1933 Industries (CSE: TGIF) endured a 20% decline in its stock price.

1933 Industries produces THC and CBD products, none of which contain either vitamin E acetate or other additives such as vegetable glycerin and propylene glycol, which have been the cause of several illnesses. Its products are also third-party lab tested.

Looking at KushCo specifically, its vape products account for approximately 70% of the company’s overall revenue.

“We believe the vast majority of these cases are linked to untested vape devices purchased from illegal markets or street dealers,” said the company in a recent investor presentation.

When buying vaping products, it is worth seeking out reputable distributors.

Privately owned MedPharm is a Denver-based marijuana company. Its director of chemistry, Tyrell Towell and extraction told Marijuana Business Daily, “Sadly, people have been hurt or even killed and our approach is to express even more our motto, our beliefs, our mission statement, that we will always provide safe, clean and pure products for adults to consume.”

Proper identification of the causes of the deaths and illnesses needs to be attained before any judgement is passed.

Perhaps if this happens in favour of vaping manufacturers, we will see a full turnaround in stock performances.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.