Grim prediction for Juul Labs amid financial strain

A major vape company needs to trim half its staff to starve off bankruptcy – but business insiders fear the worst is yet to come.

A once-leading global vape provider is looking to shave off a third of its global workforce to save itself from bankruptcy.

On Thursday, Juul Labs – a company behind rechargeable e-cigarettes (or ‘vapes’) – reached a financing deal with early investors, saving it from bankruptcy due to increasing financial and social strain.

“Today, Juul Labs has identified a path forward, enabled by an investment of capital from some of our earliest investors,” a Juul spokesperson told CNBC.

“This investment will allow Juul Labs to maintain business operations, continue advancing its administrative appeal of the FDA’s marketing denial order and support product innovation and science generation.”

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Juul Labs will sack about 400 people as it fights off bankruptcy. Picture: Patrick T. Fallon

But to move forward, the company confirmed it would need to cut a third of its staff globally – roughly 400 workers.

Juul has been fighting off attrition on multiple fronts in recent years.

After selling itself as a healthier alternative to smoking cigarettes, it soon bore the brunt of a barrage of legal cases.

Juul has reportedly settled significant cases brought by state authorities concerning its marketing practices, which many legal challengers alleged were “deceptive and failed to warn about the risks” of vaping.

Juul has faced hundreds of legal challenges. Picture: Eva Hambach

In September, Juul Labs, founded in 2015, agreed to pay $US438.5 million ($A663 million) to settle a two-year investigation by 33 US states into how it was marketing its high-nicotine vaping products.

The company also faces a plethora of personal lawsuits by US teenagers and others who claim to have become addicted to its vaping products.

The latest financing deal comes as a new report from the US’ FDA and Centers for Disease Control and Prevention revealed e-cigarettes were the most commonly used tobacco product among school students in 2022 – for the ninth year in a row.

Earlier this year, the FDA ordered Juul to stop selling its vaping products before placing a temporary hold on its order in July.

According to CNBC, business analysts forecast Juul could soon file for Chapter 11 bankruptcy protection as a way out.

The company has not released any details or terms of the investment.