Juul cuts its valuation to $10 billion – a massive drop from $38 billion two years ago

Juul Labs now has a valuation of around $10billion, down some $28billion from two years ago when Altria Group Inc. secured a 35 per cent stake of the company, employees were told on Thursday. 

Regulatory crackdowns, lawsuits and investigations about marketing geared towards teens have leveled the sales and market shares for the company. 

Last month, Juul announced that it was cutting more than half of its workforce and also considering pulling its 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 KC Crosthwaite said in the Thursday memo to staff, the Wall Street Journal reports.  

Juul reported a loss of $423million on sales of $764million for the first half of the year, the company informed employees

Juul reported a loss of $423million on sales of $764million for the first half of the year, the company informed employees

Juul’s annualized operating expenses have dropped from $2.6billion to less than $1billion since Crosthwaite took over in September 2019, he said in the memo. 

The company now has a more stable cash position, he claimed, which will allow for investments in scientific research, new products and technology to restrict underage access.

Juul reported a loss of $423million on sales of $764million for the first half of the year, the company informed employees. 

Crosthwaite also wrote that investors would likely value their stakes to account for the restructuring. Juul’s biggest investor, Altria, is expected to give investors an update of its value in the company during a Friday report of its quarterly earnings. Altria currently values Juul at around $12billion.

Juul's annualized operating expenses have dropped from $2.6billion to less than $1billion since CEO KC Crosthwaite took over in September 2019

Juul’s annualized operating expenses have dropped from $2.6billion to less than $1billion since CEO KC Crosthwaite took over in September 2019 

Traditional cigarettes and Reynolds American Inc.’s Vuse e-cigarette brand have both contributed to the decreasing sales for Juul as customers turn to those options. 

Prime retail shelf space has been lost by the company as they’ve been outbid by Reynolds and Altria, who is promoting an oral nicotine pouch called On!, according to people familiar with the matter.

Those same sources said that Juul is looking to do discounted bundles to account for the loss of space.   

Juul’s meteoric rise has been followed by a hasty retreat in recent months, amid a nationwide backlash over vaping. 

Juul's biggest investor, Altria, is expected to give investors an update of its value in the company during a Friday report of quarterly earnings

Juul’s biggest investor, Altria, is expected to give investors an update of its value in the company during a Friday report of quarterly earnings

Although Juul remains one of the dominant players in the multibillion-dollar e-cigarette market, the company has made several concessions such as pulling its mint, fruit and creme flavors from the market. The company currently sells only menthol and tobacco nicotine pods. Juul also has shuttered its social media presence and halted all US advertising.

Prime retail shelf space has been lost by the company as they've been outbid by Reynolds and Altria, who is promoting an oral nicotine pouch called On! (pictured)

Prime retail shelf space has been lost by the company as they’ve been outbid by Reynolds and Altria, who is promoting an oral nicotine pouch called On! (pictured)

The FDA and a congressional oversight panel continue to investigate whether the company targeted young people with the flavors, design and advertising of its products. A number of states have launched lawsuits against the company for targeting teens with their flavors and marketing.

Last month, an official report showed that the number of American middle and high schoolers using e-cigarettes declined dramatically in 2020 compared to last year.

The drop came after a large outbreak of e-cigarette linked lung disease last year, and after the US government made legal changes to curb youth vaping.

About 3.6 million young people in the US were current (in the past 30 days) e-cigarette users in 2020, down from 5.4 million in 2019, according to the National Youth Tobacco Survey.

The company currently sells only menthol and tobacco nicotine pods. Juul also has shuttered its social media presence and halted all US advertising

The company currently sells only menthol and tobacco nicotine pods. Juul also has shuttered its social media presence and halted all US advertising

‘Although the decline in e-cigarette use among our Nation’s youth is a notable public health achievement, our work is far from over,’ said Robert Redfield, director of the Centers for Disease Control and Prevention (CDC).

‘Youth e-cigarette use remains an epidemic, and CDC is committed to supporting efforts to protect youth from this preventable health risk.’

The self-administered survey was taken between January 16 and March 16 by around 20,000 grade 6-12 school students, who are generally aged between 11 and 18. 

Last year’s outbreak of vaping-associated lung injury, which led to 2,700 hospitalizations and 60 deaths, could have been a deterrent.

This post first appeared on dailymail.co.uk