Juul Cuts Valuation to $10 Billion
By Jennifer Maloney
Juul Labs has dropped its valuation to about $10 billion, down
from $38 billion two years ago when tobacco giant Altria Group Inc.
took a 35% stake, the company told employees on Thursday.
Once one of the country's most valuable startups, Juul has been
pummeled over the past two years by regulatory crackdowns, lawsuits
and investigations into whether it marketed its products to teens.
Its sales and market share have tumbled. The company said last
month that it was cutting more than half its workforce and
considering pulling out of most overseas markets.
"We made some difficult decisions that impacted our short-term
outlook, but we believe these choices will enable us to create
value in the future," CEO K.C. Crosthwaite said in a memo to staff
Since he took the helm of the company in September 2019, Juul's
annualized operating expenses have dropped from $2.6 billion to
less than $1 billion, he wrote in the memo. As a result, the
company has a more stable cash position, which will enable
investments in scientific research, new products and technology to
restrict underage access, he wrote.
In the first half of the year, Juul reported a loss of $423
million on sales of $764 million, according to a disclosure the
company made to employees.
Juul investors also will likely lower the value of their stakes
to account for the restructuring, Mr. Crosthwaite wrote in the
memo. Altria, Juul's biggest shareholder, reports quarterly
earnings Friday and is expected to give investors an update on the
value of its Juul investment. Altria currently values Juul at about
$12 billion. Juul's previous internal valuation earlier this year
was $13 billion.
Juul's sales are falling as some customers switch back to
traditional cigarettes and Reynolds American Inc.'s Vuse
e-cigarette brand gains market share with deep discounts and a
multimedia marketing campaign.
Juul lost some prime retail shelf space this year after being
outbid by Reynolds and Altria, which is using the space to market
an oral nicotine pouch called On!, according to people familiar
with the matter. Juul has been conducting pilots on discounted
bundles that combine a vaporizer with a pack of refill pods, the
Juul is widely blamed by school administrators and government
officials for a surge in teen vaping in the U.S. The company has
said it never marketed to teens and is working to regain the
public's trust. Since Mr. Crosthwaite took over last year, Juul has
halted most of its U.S. advertising, announced more than 2,500 job
cuts, stopped selling sweet and fruity flavors in the U.S. and
reversed its overseas expansion.
Write to Jennifer Maloney at email@example.com
(END) Dow Jones Newswires
October 29, 2020 14:16 ET (18:16 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Historical Stock Chart
From Nov 2020 to Dec 2020
Historical Stock Chart
From Dec 2019 to Dec 2020