£25,000,000,000. Twenty-five billion British pounds sterling. This is the amount that British American Tobacco will write down the value at which it holds several of its United States brands—now to carry with an estimated useful life of 30 years rather than indefinite. It would appear that the company has twisted the clock, set the stopwatch, flipped the hourglass, or whatever; the U.S. business is going to zero, and there is nothing to do but to watch the stock price follow suit. The company is in crisis.
If I had to guess, ~95% of the coverage provided to British American Tobacco since the release of its 2023 Second Half Pre-Close Trading Update can likely be distilled into the above, conforming to and perpetuating the long-prevailing narrative that the entire tobacco industry, not just British American Tobacco, is doomed. Such approaches to coverage are efficient at attracting eyeballs and garnering clicks; the priority of today’s media outlets. As for accuracy and appropriately capturing the state of the entire company as a going concern, they also happen to be insufficient.
There is no denying that British American Tobacco is facing considerable challenges. In the United States, the company’s largest segment by operating profits, volume declines have accelerated, illicit disposable vapes continue to proliferate, and new regulations are on the horizon. All considered, while the exact timing of the impairment charge was a surprise, the...
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