It is reported that a hedge fund with a Juul Labs stake has cut the value of its stake by more than a third, reducing the value of the electronic cigarette manufacturer to $24 billion. Darsana Capital Partners recently wrote down the value of its investment in the troubled e-cigarette manufacturer, suggesting that regulatory barriers have increased their impact on its business.
Darsana is one of the many hedge funds that made huge gains from Juul investment last year after a deal between Juul and Altria. Over the past four weeks, sales of e-cigarettes, including Juul, have slowed due to regulatory scrutiny, a string of negative news and an increasing number of diseases related to e-cigarettes.
Data show that sales of e-cigarettes increased by 38.1% in the four weeks ending September 21, compared with 48.1% in the past 12 weeks. Sales of Juul Labs products grew by only 31.2%, down from 56.2% in the last 12 weeks.
Although Altria invested in the controversial electronics company for about $250 a share, its share price rose to a high of about $300 a share this summer, sources said Juul’s valuation is now down 20% and its share price is between $225 and $230. The author believes that the current e-cigarette market is not good, and Juul Labs is facing a dangerous situation this time when hedge funds reduce their stakes.