Juul Slashes Valuation to $10 Billion, Half Its Size in January

Juul Labs Inc. has cut its valuation to about $10 billion, an admission that the vaping company once considered a Silicon Valley darling sees more obstacles ahead.

The latest valuation, as of the end of the third quarter, placed the company at $67.64 a share, Chief Executive Officer K.C. Crosthwaite said Thursday in a memo. The Wall Street Journal reported the valuation earlier.

Juul had been valued at $38 billion in late 2018, when Altria Group Inc. took a 35% stake. The company has since faced a series of regulatory setbacks and a raft of lawsuits from parents, school districts and state attorneys general alleging that its fruity and flavorful offerings attract young smokers.

The company has eliminated thousands of employees and scaled back its global ambitions to focus on the U.S., where regulators are reviewing its application to stay on the market.

In January, the company valued itself at roughly $20 billion. In May, it slashed its internal valuation by 35% to roughly $13 billion, days after the e-cigarette maker outlined plans to cut about a third of its workforce.

Shareholder Altria Group Inc., the maker of Marlboros for the U.S. market, reports earnings Friday morning and could share more information on its Juul valuation then. Altria erased an earlier decline, rising 1% at 3:08 p.m. in New York. An Altria spokesman declined to comment.

“Today’s valuation does not surprise me, and I expect other investors to also arrive at lower valuation marks that factor in our recent restructuring,” Crosthwaite wrote in the memo obtained by Bloomberg News.

Crosthwaite praised Juul’s cost cuts. The company recorded $934 million in operating expenses in the first half of year compared to nearly $2.6 billion all of last year, according to a financial disclosure viewed by Bloomberg.

“As a result, we have a more stable cash position, which positions us to continue to invest in our business,” Crosthwaite said, adding that those investments will be in science and future products.

©2020 Bloomberg L.P.

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