Altria Cuts Juul Valuation by $4.5 Billion
Altria Group Incorporated wrote down its investment in Juul Labs Incorporated by $4.5 billion and now values Juul at about $24 billion, according to The Wall Street Journal.
The cut in the valuation comes as a result of regulation implemented by the U.S. banning e-cigarette flavors and increased regulations on the industry. The new valuation of $24 billion is less than a third of the original.
Altria invested in Juul amid decreasing cigarette sales. They paid $12.8 billion for a 35 percent stake in Juul. Juul has been under scrutiny from U.S. lawmakers over concern that their e-cigarette flavors increased teen vaping. The e-cigarette flavors represent more than 80 percent of Juul's sales in the U.S.
Juul has recently announced a restructuring plan that includes cutting 400 to 600 jobs by the end of the year, in the attempt to help repair relationships with regulators. Altria stated that Juul has its support in the restructuring of the company.
“One stock decision in particular hurt by far more than any other: electronic cigarette maker Juul Labs,” Fidelity’s Blue Chip Growth Fund said in its quarterly fund commentary. “Juul’s valuation…fell this period as the company faced myriad regulatory challenges.”
Altria cut the value of its stake in Juul by over $4.5 billion and valued the company at less than a third of its original valuation amid regulation and bans of e-cigarette flavors.