Juul Labs, which is partially owned by tobacco giant Altria (NYSE:MO), is making headlines after receiving an investment from two early investors and initiating layoffs. As part of a cost savings and reorganization plan, Juul will lay off 400 employees in an attempt to reduce its operating budget by 30% to 40%.
The two early investors are the head of Hyatt Hotels (NYSE:H) Nicholas Pritzker and private equity specialist Riaz Valani.
The exact size of the investment that Juul received was not disclosed. The vape company stated that it will use the proceeds for company operations, such as challenging a marketing denial order from the Food and Drug Administration (FDA).
Juul Labs Initiates Layoffs, Receives Investment
Juul took the world by storm five years ago, introducing sweet e-juice flavors such as creme brulee and mango. However, the company soon became the center of attention of the FDA after attracting teenage use.
In June, the FDA announced that it had placed a marketing denial order on Juul, which effectively banned the sale of its products. The FDA cited a lack of evidence concerning the potential of chemicals leaking out of Juul cartridges. Later on, the agency placed a hold on the order due to Juul filing an appeal. As a result, Juul was allowed back on the market.
Today, Juul’s share of the $5.5 billion market has fallen to 33% compared to 75% at its high. Investors will want to stay up to date as the FDA reviews Juul’s appeal.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.