Altria’s $12.8 billion investment in Juul turns into a quarterly loss of $1.81 billion for the tobacco producer

Altria lost 7% in the stock market on Thursday as it posted a downbeat quarterly earnings report that highlighted massive loss in the recent quarter. On top of that, the tobacco company had previously made a rather sizeable, $12.8 billion investment in Juul (e-cigarette company). The investment, however, took a $4.1 billion hit as Juul faces intense litigation for its role in fueling teen vaping. The Marlboro maker also commented on Thursday that the legal cases have recently been increasing against Juul and are also expected to rise further in the upcoming months. In the recent quarter, the company remarked, legal cases against Juul have risen by 80% that contributed to widening the impairment charge for Altria. The Virginia based tobacco maker is currently valued at around $90 billion.

Altria Reported $1 Per Share Of Loss In The Fourth Quarter

Altria’s loss in the fourth quarter was reported at $1.81 billion that translates to $1 per share. In the same quarter last year, the company had recorded 66 cents of earnings per share on $1.25 billion of net income. Excluding the impairment charge, Altria announced its earnings per share (EPS) at $1.02 in the recent quarter that matched the analysts’ estimate announced by Refinitiv. On the sales front, however, analysts had anticipated $4.88 billion for Altria in Q4 that came out shy at $4.80 billion on Thursday. In December 2018, Altria acquired 35% of Juul’s stake with an investment of $12.8 billion. In the wake of the contracting cigarette industry in the United States, Altria was aimed at expanding into the advanced segments like e-cigarettes with its investment. In fiscal 2020, Altria expects a 4% to 6% further contraction in the U.S cigarette industry. The current litigation against Juul stems from the public health concern following multiple consumers, specifically teenagers, acquiring a mysterious vaping related illness. As of January 21^st, as many as 2,711 people have been hospitalized while there have been 60 casualties associated with the vaping illness in the U.S.

Altria’s All-New Iqos Is Directed At Offering Cigarette Alternative To The Consumers

Altria has recently launched a new product by the name if Iqos in an attempt to contribute to offering effective alternatives to traditional cigarettes to consumers. Iqos heats tobacco but refrains from burning it. Consequently, consumers enjoy a similar nicotine rush while being exposed to lesser toxins. The product, as per Altria, has been introduced to 500 of its retail stores across Richmond and Atlanta in the fourth quarter. At the time of writing, Altria is trading at around $48.00 in the stock market that marks almost the same level at which it opened in January 2019.