Huge sales of the nicotine patch Zyn have sent Philip Morris's stock to an all-time high
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- Philip Morris International stock surged 10% after strong Q3 revenue and profit guidance.
- Zyn nicotine pouch sales grew 41% in the US in the third quarter.
- Zyn continues to be a hit with young professionals and those looking to lose weight.
Nicotine pouch maker Zyn is on a roll, and it's boosting the company's bottom line.
Zyn producer Philip Morris International's stock rose 10% on Tuesday after the company reported better-than-expected third-quarter revenue and raised its full-year profit guidance. The gain was the biggest in over a decade and brought the company stock price to a record high.
PMI, which produces Marlboro cigarettes outside the US, reported revenue of $9.9 billion for the third quarter, an 8.4% increase year-to-year.
The company has beat analyst expectations for three straight quarters and its stock is up over 37% year-to-date.
Third-quarter sales of mega-hit nicotine pouch Zyn grew 41% in the US and 70% internationally, despite a small increase in prices, chief financial officer Emmanuel Babeau said on Tuesday's earnings call.
Zyn's performance comes amid PMI's push for more smoke-free alternatives, as consumers and governments shun traditional tobacco products. The company said smoke-free products, which include Zyn and IQOS vapes, accounted for 40% of profits this quarter.
The chewing-gum-like oral pouches, which are popular with young professionals, have been in short supply across the country this year. PMI is building a factory in Colorado in 2025 to ease some of its US supply chain tensions, Babeau said in June.
The flavored nicotine pouches have been available in the US since 2014 but have boomed in popularity recently. They have become a pick-me-up for office employees looking to feel more productive, and are a favorite for high-powered Wall Street traders and Republican lawmakers alike. Loyal users of these pouches have said that Zyn helped them lose weight, comparing them to the viral weight-loss drug Ozempic.
Medical experts and research studies warn nicotine can be addictive and can have harmful effects on the body, and there are no studies about nicotine's effectiveness in weight-loss, Business Insider previously reported.
The Food and Drug Administration has been cracking down on underage Zyn sales. Earlier this year, the agency said it sent 119 warning letters to retailers and filed 41 civil complaints for sales of Zyn to underage buyers last year and this year.
In June, PMI received a subpoena from the District of Columbia's attorney general about online sales of flavored nicotine products, which have been banned in DC since October 2022.