Altria (NYSE: MO) stock price lost significant value in the past six months. This is because of its huge debt burden and traders’ concerns over E-cigarette vapor.
MO shares plunged 12% in the last three months, extending the six months downtrend by 22%. Altria stock price is currently trading around $42, slightly up from the 52-weeks low of $38.
The U.S. Food and Drug Administration has been constantly warning consumers not to use vaping products. The authority took this decision after the death of several people.
Analysts Warning Could Impact Altria Stock Price
Despite the recent selloff, market analysts are seeing further pressure on MO shares. This is only due to concerns over E-cigarette vaping revenue.
Fitch Ratings claims the tobacco industry could experience slower growth in the coming days.
This is due to the recent regulatory scrutiny of next-generation products. The firm believes Altria is among companies that are significantly exposed to the US vaping market amid its stake in JUUL.
Fitch said, “Altria is exposed to the US vaping market indirectly via its 35% stake in e-cigarettes producer JUUL. The probability Altria impairs the value of its 35% investment in Juul has increased materially due to considerably diminished and uncertain e-vaping growth prospects.”
Debt Burden and Cash Flows Are Among The Concerns
Altria is under a huge debt burden. The recent investments in JUUL and Cronos Group have added to its debt burden.
The company took $15 billion of debt to fund these investments, adding to a total of $29 billion debt. The company plans to repay $1 billion of debt every year to reduce the debt burden.
Due to the massive debt burden, the traders are seeing threats for MO dividends.
The company currently offers a dividend yield of 8%. Its quarterly dividend payments stand around $1.5 billion. Overall, Altria stock price could experience pressure in the short-term. Restrictions on vaping, debt burden and the potential dividend cut are among the concerns.