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Hedge Fund Banks On Millennial Ignorance And Newfound Nicotine Addiction

Nicotine always finds a way

"Let me rip that real quick"

The phrase has been muttered around college and millennial bars millions, if not billions of times, in conjunction with the atmospheric rise of the Juul. For those of you who don't know, the Juul is a revolutionary technology millennials use to fulfill their nicotine needs, free from the scent of guilt and old people that comes with smoking cigarettes.

The Juul device, which resembles a USB flash drive, delivers a powerful dose of nicotine in a salt solution that smokers say closely mimics the feeling of inhaling cigarettes. The Juul liquid’s 5% nicotine concentration is higher than most other commercially available e-cigarettes. Juul flavors include “Creme Brulee” and “Fruit Medley,” which critics have said make it more attractive to minors.

Ripping one of these suckers for ten-second floors you like you're throwing in a Copenhagen upper-decker for the first time. There's nothing like some wobbly knees while the taste of artificial fruits makes you feel as if you've just licked a car air freshener, but mediocre pod flavors haven't slowed down the E-cig company in the slightest.

The good folks over at Tiger Global Management noticed the rapid growth and threw in a cool $600 million to assist Juul in their $1.25 billion fundraising push, raising the value of Juul to around $15 billion. And this isn't Juul's first big break.

Even for fast-moving Silicon Valley, Juul has grown at an astounding pace to become the sixth most valuable U.S. startup behind companies like Uber Technologies Inc. and Airbnb Inc., according to Dow Jones VentureSource. Its price per share in the current fundraising round is 56 times the 2015 price, according to a Juul filing in Delaware provided by Lagniappe Labs, a research company. That implies Juul’s valuation was less than $300 million in 2015.

At $15 billion, Juul would rival the stock market valuations of public companies such as Molson Coors Brewing Co. and Restaurant Brands International Inc., the owner of Burger King and Tim Hortons.

$15 Billion is nothing to shake a cigarette at, especially if you consider that tobacco use among millennials in the United States, and the general public, has been declining for a number of years. However, Tiger Capital knows tobacco is declining, but stupidity never declines.

Millennial ignorance has been a key factor in the growth of the Juul. Unlike tobacco, millennials don't face cognitive dissonance when they use Juuls. In fact, users are so comfortable with their Juuls that the devices are a problem for the high schools and middle schools all across the nation. I've seen plenty of people using Juuls in libraries, classrooms, and study rooms all across my university campus. Not only because the smoke is almost odorless compared to a cigarette, but also because many are under the illusion that Juuls are nicotine free.

The new study found that 25 percent of survey respondents aged 15 to 24 recognized a Juul e-cigarette device when shown a photo of the product. Among those who recognized it, 23 percent said use of the product is called "Juuling," suggesting the product is so distinctive that young people place it in a category of its own, said Truth Initiative, the group that conducted the study.

But 63 percent of Juul users did not know that the product contains nicotine, the findings showed.

In my experience, many will even go so far as to tell you they are much safer than any other e-cig or tobacco alternative. After all, the Juul was invented by Stanford Master's students searching for an alternative to cigarettes, so it can't be bad for you, right? It's Stanford.

That rationale sounds nice, but just ask some early '70s test subjects what they think of the researchers over at Stanford. At best, Juuls are probably about as bad the next e-cig and at worst, in 20 years we're going to breathing from our respirators and dialing the number we see on the commercial that says, "If you smoked a Juul and you suffer from (insert condition(s) here) you may be liable for compensation." Though that possibility lingers in the back of our minds, it's not going to stop millennials from grabbing these babies off of the shelves. Just look at all the Wall Street Instagram accounts. The entire analyst and intern community are embracing Juul's rise in valuation like no other. And unless proven health risks are brought before consumers, the millennials will continue to buy the product. And even more important, the value of Juul will continue to rise and the investors will rejoice.

Twitter: @InternThad

Smoking is down, but almost 38 million American adults still smoke [CDC]

Schools and Parents Fight a Juul E-Cigarette Epidemic [WSJ]

Juul Raises $650 Million in Funding That Values E-Cig Startup at $15 Billion [WSJ]

Many Teens Don't Know Juul Contains Addictive Nicotine [U.S. News and World Report Health]



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