Kaival Brands' (NASDAQ: KAVL) stock has been on a roller coaster ride of late. And for those who get motion sickness, consider taking the ride anyway. That's because truth be told, $KAVL is an ideal takeover target.
Why? Because KAVL is essentially the last company standing in an FDA-fueled attempt to rid the market of electronic nicotine delivery system (ENDS) products, even for users over the legal age. Proof of that is having industry behemoth Philip Morris ($PM) signing a deal in June with KAVL's wholly owned subsidiary,
Make no mistake, having $PM as a partner is a massive score for KAVL. No one is underestimating that value here. But what also shouldn't be under-appreciated is the reality for KAVL that if they did intend to take this project forward independently, they likely wouldn't have issues raising capital. In fact, that's happening now.
Developing Global Opportunities
In July, KAVL announced the launching of PMPSA's custom-branded self-contained e-vapor product, VEEBA, being sold in
Separately, in
A Massively Changed Sector
That's created a roller coaster ride for the entire sector, with federal regulators relentless in not letting markets care for themselves. In fact, the ambiguous and inconsistent intervention has all but extinguished a multi-billion dollar flavored electronic delivery systems market. And while the intent may be well-founded, the unintended consequences are having a considerable impact on those in the sector. Many brands, small and large, may not survive the challenges imposed by the FDA. The great news- Kaival Brands appears to be one that will.
That's because, unlike many of its competitors, they have ENDS products and data that comply with the new order. Companies relying on flavored products, and those that didn't complete mandated PMTA submissions, may not get a second chance to enjoy the same marketing luxury.
There's even better news. In addition to the likelihood that
Hence, as KAVL re-engages to market its non-flavored BIDI Vapor products in the states, investors should take notice of their intention to penetrate markets where lucrative and broad marketing opportunities still exist.
That initiative is underway.
BIDI Vapor Into U.
In fact, Kaival Brands announced plans to launch its BIDI Vapor products in the
Know this, too. Most countries aren't following the
And given the favorable dynamics of the
Leveraging
KAVL can benefit from existing business relationships as well. KAVL clarified that while simultaneously building out its
Notably, while in focus more today, the
Also important, while the
Thus, the combination is potentially excellent news for KAVL, with BIDI Vapor products serving as an authentic, effective alternative for adult smokers of traditional combustible cigarettes. Further, while easy to say now, its product design and approach to marketing look to be a better fit overseas, especially with the
Non-Flavored ENDS Back In-Play
Here's the most excellent news. From an investor's perspective, with $PM support, KAVL's interests are back in play in the
Keep in mind, too, before the recent PMTA update, hundreds of companies were competing in the marketplace. Now, a fraction of that number is left standing as most lacked the resources to develop the scientific evidence needed to meet the
KAVL, on the other hand, not only submitted volumes of data but positioned itself to tap the capital markets if and when needed. And at this point, trading a little bit of dilution to own a substantial share of a billion-dollar market is a fair trade. Hence, when KAVL says they see blue skies ahead, it's safe to give them the benefit of the doubt. Few other companies can and/or are making the same forecast.
Thus, while many companies got smoked in the FDA rampage, the survivors, like Kaival Brands, inherited the ability to accelerate growth and capture market share far faster than expected. Put simply, with KAVL one of the last competitors standing in a billion-dollar sector, two words say it all... take advantage.
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