Altria Tobacco Invests $12.8 Billion in Juul… stock downgraded as a result


Altria (MO), who recently invested $1.8 billion in marijuana company Cronos Group (CRON), has just made a $12.8 billion investment in Juul e-cigarette maker.

For a 35% stake that values Juul at $38 billion, a figure some investors like Citi banks Spielman find unjustified

Spielman’s biggest hang-up is the valuation, which raised a few eyebrows when it was announced. He warns that while Altria hasn’t revealed many financial details, he suspects that the move is “destroying value.” While the company justified it as a tech-style multiple, the problem is that “investors own MO for predictability and cash. If they want tech-style growth and risk, surely they’d want to pick their own stock?” he asks.

It isn’t just the price paid that has him worried. Smoking has fallen to near-record lows in the U.S., while the Food and Drug Administration has called vaping an “epidemic” among teenagers, so it isn’t surprising that tobacco companies are bracing for a future without traditional cigarettes.


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