What happened
Shares of Altria (MO 0.98%) were heading lower today as the Marlboro-maker has reported a number of negative news items in recent days. Those include marijuana grower Cronos Group (CRON 1.93%), in which it has a 45% stake, receiving an SEC inquiry, Altria's CEO testing positive with coronavirus, and the temporary suspension of operations at its Richmond, Virginia, manufacturing facility.
As a result, the stock was down 7% as of 12:17 p.m. EDT, compared to a 3.9% decline in the S&P 500 at the same time.
Image source: Getty Images.
So what
The domestic tobacco seller said last Thursday that it would close its primary production facility in Virginia for two months after learning that two employees had tested positive for COVID-19. The company also said it had two months worth of cigarette inventory ready for shipping, indicating it won't run into supply chain problems unless its plant stays closed through May.
The following day, Altria revealed that CEO Howard Willard had tested positive for COVID-19 and would take a leave of absence as a result. In his place, CFO William Gifford will serve as CEO until Willard returns.
Then, according to Marketwatch, over the weekend, the company received a letter from the SEC asking it to keep all records related to bulk resin purchases and wholesale biomass sales as the agency has questions related to revenue recognition. That could spell problems for Cronos, and Altria has already significant damage to Juul, the e-cigarette company whose valuation has fallen sharply since Altria took a 35% stake.
Now what
As a producer of consumer staples, or products consumers buy regardless of the state of the overall economy, Altria seemed like it was in a solid position to endure the coronavirus crisis. However, with its chief out for at least two weeks, its primary manufacturing facility temporarily down, and concerns about its investment in Cronos Group, it's clear the company is going to be facing significant headwinds, at least for the near term.
