According to a Bloomberg report on February 22, JUUL Lab’s management expects its revenues to rise to $3.4 billion in 2019—161.5% growth from $1.3 billion in 2018.
The expectation of strong sales growth in 2019 indicates JUUL’s optimism about the sales of its slender JUUL vaping devices and nicotine pods in markets overseas. The company’s management doesn’t expect other governments to crack down on its products like the US government.
Bloomberg reported that JUUL’s management addressed investors and discussed its decision to remove its flavored products from convenience stores and gas stations. The company also removed its social media presence due to concerns about the rising usage of e-cigarettes among underaged youth. Removing the products and the company’s social media presence had a negative impact on its revenues in the fourth quarter. During the fourth quarter, the company posted revenues of $424 million—a fall of 2.5% from the third quarter. In the fourth quarter, the company reportedly incurred a loss of $70 million—compared to a profit of $17 million in the third quarter. The company’s management added that some of the declines in its US sales were offset by gains in sales overseas.
In December, Altria (MO) announced that it would invest $12.8 billion in JUUL Labs for a 35% stake in the e-cigarette company. The deal hasn’t been approved by regulators yet. Bloomberg’s announcement appears to have increased investors’ confidence, which led to a rise in Altria’s stock price. By the end of February 22, Altria was trading at $51.50—a rise of 2.2% from the previous day’s closing price.
After losing 30.8% of the stock value in 2018, Altria has started 2019 on a positive note. The company has returned 4.3% YTD (year-to-date) as of February 22. During the same period, Philip Morris International (PM) and British American Tobacco (BTI) have returned 30.5% and 18.6%, respectively. The Consumer Staples Select Sector SPDR ETF’s (XLP) stock price, which invests 8.7% of its portfolio in cigarettes and tobacco companies, has returned 7.2% YTD.