23andMe Destroyed by Hackers and Losses

Companies and Brands

Published: February 1, 2024 7:30 am

23andMe Holding Co.’s (NASDAQ: ME) plans have come under attack by investors and the media after 23andMe stock collapsed in the past year. A major hack of its database and a tremendous loss have helped these attacks and cemented talk about its survival.

The Wall Street Journal recently reported that 23andMe once had a market cap of $6 billion. That has dropped to $350 million. The paper points out that the company has tried using DNA from its primary testing product to build a portfolio of new drugs. The report said, “Unlike most small biotechs, which focus on a few areas, 23andMe investigated treatments for dozens of diseases.” So, 23andMe’s primary move to increase revenue and share value is almost certainly a failure.

Hackers hit the company, and the extent of the problem was revealed in a blog post in early December. After describing the 23andMe hack, management put the problem in plain English: “That is, usernames and passwords that were used on 23andMe.com were the same as those used on other websites that have been previously compromised or otherwise available.” 23andMe said some customers could have been the source of the back. Among the targets of the hacks were Ashkenazi Jews and Chinese customers. (Here is a ranking of the states with the most cybercrime.)

Because the 23andMe share price has dropped below $1, the Nasdaq has warned that it could delist 23andMe stock. Additionally, the company faces what could be an existential threat because of a class action suit tied to the huge hack. Fast Company says of the lawsuits, “There are currently three dozen class action suits tied to last year’s hack—and 23andMe has asked a judge to consolidate those into a single trial.”

At the foundation of the 23andMe is its financials. In the most recent quarter, revenue fell to $50.0 million from $75.7 million in the year earlier. The company lost $75.2 million, compared to a loss of $67.4 million a year ago. It had $256 million on its balance sheet, which will not last a year at the current pace of losses. Its attempt to move into biotech has not taken hold, and its current business is in a mess.

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