Vapor Group Defends Position as Stock Continues to Slide

NEW YORK (TheStreet) -- Recently TheStreet reported in a short video that the company Vapor Group (VPOR) had completed a private placement. The company felt compelled to "clarify" several points in a press release. The company's response also triggered an angry Twitter campaign defending Vapor Group.

Even in its clarification, however, the company itself agreed that what was reported in that video was accurate.

Vapor Group is a micro-cap company that has reported a net loss for the past three years. It would not warrant significant attention except that it represents a nascent industry that is facing some considerable obstacles to growth.

For one, big tobacco has entered the space -- in particular, Reynolds (RAI) and Lorillard (LO) . These companies have deep pockets and can sustain losses as they build their businesses. It will be very difficult for the all of the smaller early e-cigarette players (not just Vapor Group) to go up against these powerhouses. Reynolds is particularly impressive with its product and commitment to the market. That presence is a negative headwind that bears mentioning to investors.

In its press release, Vapor Group addressed this point.

Yes, there are bigger players in the e-cigarette space than we are -- players with considerable mass distribution muscle such as the traditional cigarette companies. But remember that the e-cigarette industry is still in its infancy, and typically market and technological leadership changes frequently and rapidly at this stage of a newborn sector's life. . . . We don't think we are going away soon. . . . .

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