Fidelity Cuts Its Valuation of Juul to New Low

(Bloomberg) -- Fidelity Investments, an early investor in Juul Labs Inc., has further cut its valuation of the troubled e-cigarette company to $16.4 billion.

The Fidelity Blue Chip Growth Fund disclosed that the value of its shares in closely held Juul fell 6.2% during October from the previous month, according to a Nov. 30 report on its website. The fund held almost two-thirds of the 4.1 million Juul shares that Fidelity reported owning on a combined basis at the end of July.

Tiger Global Management, the hedge fund run by Chase Coleman, slashed its valuation of Juul by half to $19 billion in September, according to a person with knowledge of the matter. Despite the drop, the fund is up 33% for the year through November, the person said.

Juul’s valuation reached $38 billion a year ago when Altria Group Inc. acquired a 35% stake amid vaping’s surging popularity. Altria’s investment made the startup one of the most valuable companies in Silicon Valley and founders Adam Bowen and James Monsees the world’s first e-cigarette billionaires.

But Juul’s success led to criticism that the e-cigarette company is responsible for a jump in teen vaping, leading to a investigation by federal regulators.

A spokesman for Fidelity had no immediate comment, while Tiger Global and Juul declined to comment. Altria declined to comment beyond noting that the company took a Juul-related $4.5 billion charge in the third quarter as U.S. vaping volume came in lower than expected.

The Wall Street Journal reported Tiger Global’s decision earlier Monday.

Former Altria executive K.C. Crosthwaite replaced Kevin Burns as Juul’s chief executive officer in September, the same month the U.S. Food and Drug Administration accused the company of marketing its product as a safer alternative to tobacco without government approval. In October, Juul announced it would cut as much as 15% of its workforce.

--With assistance from Melissa Karsh and Cristin Flanagan.

To contact the reporters on this story: Miles Weiss in Washington at mweiss@bloomberg.net;Sophie Alexander in New York at salexander82@bloomberg.net

To contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, Steven Crabill

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