Zyn-sanity Sends Philip Morris Stock Up 2% with New $600M Factory

Philip Morris International is smoking hot right now (pun intended), and Wall Street is loving it. The company's shares are trading up 2% in premarket trading, all because they dropped some stellar news.

They're upping their annual profit forecast. Why? Well, you can thank the skyrocketing demand for Zyn nicotine pouches and the higher prices of their cigarettes. 

Zyn nicotine pouches are the new cool kids in Philip Morris' quest to dominate the nicotine market. They're practically everywhere—you’ve probably seen them at the golf course, in your friend’s car, or all over Instagram. 

Despite a few hiccups like supply issues and a nationwide pause on online sales (thanks, regulators), Zyn's shipment volumes skyrocketed by an impressive 50.3% in the second quarter compared to last year. And to show off even more, they had nearly an 80% jump the quarter before that.

Philip Morris is now predicting that their adjusted annual profit per share will be between $6.67 and $6.79. That's a bump up from their previous guess of $6.55 to $6.67 per share. To put it simply, they’re expecting to make more money per share—between 2% and 4% more. They’re also predicting U.S. shipments of nicotine pouches to hit between 560 million and 580 million cans. That’s a slight increase from their earlier estimate.

Philip Morris has been raising cigarette prices to make up for fewer people buying them, thanks to stricter rules and more folks quitting for health reasons. It’s a tricky move, but it’s working. At the same time, they’re boosting production of Zyn nicotine pouches, which they started making more of after buying Swedish Match in 2022, to meet the growing demand in the U.S.

Of course, it's not all smooth sailing. Anti-smoking groups are pushing back, especially against their new heated tobacco product, IQOS. But Philip Morris is pressing on, with overall shipment volume for heated tobacco jumping 13.1% from last year, on top of a 20.9% rise in the previous quarter.

Shifting back to the nicotine pouches, Philip Morris is investing a whopping $600 million to build a shiny new factory in Aurora, Colorado. Why? Because Zyn is so hot right now that it's practically flying off the shelves, causing shortages everywhere.

Stacey Kennedy, PMI Americas President and U.S. CEO, said they’re stepping on the gas to help smokers switch to these pouches by boosting U.S. production. She also gave a big thumbs-up to Colorado for being all about innovation, economic growth, and public health.

(Source: CPR News)

This new facility is expected to create 500 direct jobs with an average annual salary of $90,000, plus an economic impact of $550 million and another 1,000 indirect jobs. And don't forget the 1,000 construction jobs that'll pop up as the factory gets built. This announcement is on top of an earlier plan to boost Zyn production at an existing Kentucky facility, aiming to quickly alleviate the current shortage.

(Source: KKTV)

But, as Zyn's popularity soars, so do the safety questions. PMI insists its products are scientifically backed as better alternatives to traditional cigarettes. However, the FDA stands firm that nicotine is addictive and can lead to continued tobacco use, and they strictly prohibit selling any tobacco or alternative products like Zyn to users under 21. But no matter who stands in their way, it seems like Zyn’s popularity keeps rising, along with its stock price.

Stock.News does not have positions in companies mentioned.