Federal prosecutors in California are launching a criminal probe into Juul Labs, according to The Wall Street Journal. The investigation is reportedly in the early stages.

Juul has built a leading position in the e-cigarette market. Some estimates place its market share at more than 70%. The company's sales have exploded in recent years, with Juul generating approximately $2 billion in 2018 alone. 

Juul's rapid growth garnered the attention of tobacco titan Altria (NYSE:MO), which paid $12.8 billion to acquire a 35% stake in the e-cigarette leader in December. Now, however, analysts are questioning whether the value of Juul's business -- and by extension, Altria's investment -- will plunge as the company finds itself amid a potential maelstrom of regulatory action.

A person blowing out smoke from a vaping device.

Investors are concerned that Juul's business could go up in smoke. Image source: Getty Images.

Surging teen e-cigarette usage and recent vaping-related deaths have regulators threatening to ban sales of flavored e-cigarettes, which currently account for the majority of Juul's revenue.

Juul is also facing scrutiny from the Federal Trade Commission, which is looking into whether the company improperly targeted teenagers with its advertising.

There's also the possibility that the Food and Drug Administration might not approve Juul's products during its safety review, which could limit the e-cig company's sales to international markets.

For these reasons, Juul's future is in doubt. Juul's struggles have also weighed on Altria's stock. The tobacco giant's shares are down 17% so far in 2019 and are trading near multiyear lows.