British American Tobacco (BAT) shares closed lower on Friday, extending a difficult week for the London-listed tobacco giant. The stock ended the session at 4,591 pence, down 2.46% on the day and approximately 5.8% lower over the week, as selling pressure persisted despite ongoing share buyback activity. The decline outpaced the FTSE 100 index, which slipped just 0.16% on Friday.
The weakness comes as investors position themselves ahead of BAT's pre-close trading update for the first half of 2026, scheduled for Tuesday, June 2. The update, which will be released at 7:00 a.m. BST, will provide the company's final guidance before entering its quiet period. Chief Executive Tadeu Marroco will host a call with investors at 8:30 a.m. BST, joined by interim finance head Javed Iqbal and investor relations lead Victoria Buxton.
Friday's decline was the fourth consecutive down session after the London Stock Exchange reopened following the Spring Bank Holiday on Monday, May 25. With only four trading days in the shortened week, investors had limited time to adjust positions before the weekend.
BAT's February guidance already signaled a cautious outlook for 2026, with the company projecting results at the lower end of its medium-term targets. Management forecast revenue growth of 3% to 5%, adjusted operating profit growth of 4% to 6%, and adjusted diluted earnings per share growth of 5% to 8%, all on a constant currency basis. The company's adjusted figures exclude one-time items and currency fluctuations.
Attention will focus on Marroco's commentary regarding the company's smokeless portfolio, particularly the Vuse vape brand and Velo nicotine pouches. In February, Marroco described Vuse's recent gains as "encouraging" and said the brand was "well positioned" to benefit from tougher U.S. enforcement. He also noted that Velo had risen to the number two position in U.S. volume and value share.
Regulatory developments in the United States could provide a tailwind. According to Reuters, the Food and Drug Administration (FDA) has signaled a softer approach to enforcing rules on new vape and nicotine pouch products, potentially allowing more products to remain on shelves during the review process through what is known as enforcement discretion. Barclays analyst Pallav Mittal said the move could "catalyse sales" for the sector, potentially benefiting BAT's Reynolds American unit, which could test flavored versions of Vuse.
However, the regulatory landscape remains uncertain. Former FDA tobacco center director Brian King described the shift as "a longstanding ask by industry," while Harvard's Vaughan Rees noted that adult smokers want options. But Mitch Zeller, another former FDA tobacco official, warned that political pressure was "really bad for public health." For BAT shareholders, easier U.S. rules could improve sentiment but also invite legal, political, or public-health backlash.
In Europe, BAT faces a different challenge. On May 26, the company announced it had launched an initiative to engage consumers and retailers as the European Commission reviews its tobacco and nicotine regulations. BAT indicated that the Commission may restrict or ban certain smokeless products, which could dampen the value of BAT's smokeless growth if Europe tightens while the U.S. eases.
BAT's share buyback program provided some support last week, but selling continued nonetheless. The company repurchased 562,557 ordinary shares between May 18 and May 22, which will be cancelled to reduce the share count. Despite this, the stock struggled to hold gains.
Investors will look to Tuesday's update for clarity on U.S. momentum, Vuse's performance, and whether the second half of 2026 can deliver sufficient profit to meet the company's targets. Brokers caution that a cleaner update won't erase the structural overhang from regulation, declining cigarette volumes, illegal vapes, or tax pressures. But it could remind investors why BAT remains a large-cap income play. A softer message may suggest that last week's decline is more than just positioning ahead of the weekend—it could mark the start of a new phase for the stock.
