Tobacco giant Altria Group (MO) - Get Report on Thursday said it was taking a second multi-billion-dollar charge on its investment in Juul Labs and is scaling back the services it provided the company amid ongoing regulatory and medical scrutiny of the e-cigarette market.
In its quarterly results, Altria revealed that the value of its stake in Juul fell by $4.1 billion in the fourth quarter. It now values the e-cigarette maker at about $12 billion, down from its $38 billion valuation when it first invested in Juul in 2018.
It is the second big charge the Marlboro maker has taken on the investment. In October, Altria wrote down its Juul stake by $4.5 billion. The company said the latest charge reflected mounting litigation against Juul.
It also comes amid ongoing regulatory and medical scrutiny of the e-cigarette market, specifically whether Juul intentionally marketed its smokeless smoking device to teens, and more generally whether its products cause respiratory and other health problems.
Facing an accelerating decline in cigarette sales, Altria in 2018 paid $12.8 billion cash for a 35% stake in Juul, making it one of Silicon Valley’s most valuable startups.
Juul since then has been buffeted by lawsuits, bans on its products and investigations into its marketing practices. Blamed for a surge in underage vaping, Juul has pulled most of its flavors from the U.S. market and scaled back its international expansion.
The writedown in Juul came as Altria reported adjusted per-share earnings of $1.02 on sales of $4.8 billion, slightly below analysts' forecasts. Altria said it expects its 2020 full-year adjusted per-share earnings to be in a range of $4.39 to $4.51.
Shares of Altria fell 5.19% to $47.51 in morning trading on Thursday.
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