Battered 23andMe Holding Co. (NASDAQ: ME), its shares driven down to penny stock levels, may disappear from the public markets completely. That is if its CEO can take the company private. If not, 23andMe may run out of money.
CEO Anne Wojcicki has told a special committee of the 23andMe board that she will begin to look for funding to buy out public investors. According to an SEC filing, “Ms. Wojcicki also indicated that she wishes to maintain control of the Issuer and, therefore, will not be willing to support any alternative transaction.” In other words, if she cannot get her way, she will ensure 23andMe is not taken over.
23andMe shares trade at $0.36 apiece, and its market cap is down to $172 million. The stock traded at $3.50 a share in May 2022. (Check out three stocks under $5 that Wall Street thinks will grow 35% or more.)
23andMe is in the personal DNA business, which has lost much popularity. The company decided to use its database of DNA to help with drug trials. Since these trials can often take years, the goal of that business may only be hit near the end of this decade, if at all. 23andMe bought a company to help make this work. However, that has yet to work.
In the most recently reported quarter, 23andMe posted revenue of $44.7 million, down from $66.9 million in the same quarter the year before. The company lost $278 million, compared to $99.3 million a year ago.
At the current burn rate, 23andMe will run out of cash in a year. Given its stock price, it seems to be in an unattractive business. So why would investors take it private? Without a transaction, it is hard to see how 23andMe can survive.
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