- Sarah Johnson/Flickr
- Top Juul Labs investor Altria has lost $31 billion in market value since April, when the Food and Drug Administration launched a new investigation into vaping.
- Altria bought a $12.8 billion stake in Juul back in December.
- A litany of setbacks have weighed on Juul and Altria since, including a growing number of illnesses and deaths related to vaping and e-cigarette use.
- Watch Altria trade live on Markets Insider.
The traditional tobacco company has seen $30 billion in market valuation since the FDA announced a new investigation into the link between vaping and seizures. That translates to roughly one-third of Altria’s market value wiped out. For context, the S&P 500 has climbed 5% over the same period.
Altria is vulnerable to such negative developments in the vaping space after paying $12.8 billion in December for a major stake in Juul, a leading vape company responsible for roughly 70% of the e-cigarette market. The company’s products are particularly popular with teens.
A litany of setbacks have weighed on Juul, and brought down Altria’s stock in the process. A number of states have banned flavored tobacco products like the ones Juul sells. Meanwhile, President Trump said he is pushing for a ban of flavored e-cigarettes across the US.
The issues have escalated recently. More than 530 people in the US have been either hospitalized, and seven have died from vaping and developing mysterious lung injuries, according to the CDC. Both the FDA and the CDC are working together to find potential causes.
Further, Juul has more to contend with outside potential illnesses caused by its product. The Federal Trade Commission recently launched an investigation to determine if Juul used deceptive marketing and influencers to appeal to minors, the Wall Street Journal reported.
Caught in the middle is its potential merger with Philip Morris International. In August, the two tobacco companies confirmed that they’re discussing a “merger of equals.” Combining the companies would create a tobacco giant worth roughly $200 billion.
Shares of Altria are down roughly 18% year-to-date.
- Markets Insider