• by Sarah Mahoney , Staff Writer @mahoney_sarah, April 22, 2024

Despite the ability to convince millions of people to spit into a test tube and explore their families’ unknown origin stories, 23andMe is still struggling. And the woes are bad enough that it is looking for an offramp from public ownership. Anne Wojcicki, chief executive officer and co-founder, announced last week she is mulling a proposal to acquire all the outstanding shares she does not currently own.

The news from the Silicon Valley-based company is hardly surprising. The 2021 merger with Virgin Galactic, a special acquisition company (or SPAC) owned by Sir Richard Branson, boosted 23andMe’s value to $3.5 billion, or about $16 per share.

Since then, the value has withered. The stock hasn’t traded above $4 per share in nearly two years and has fallen below the $1 per share threshold since September.

Despite numerous partnerships with medical research and pharmaceutical companies, 23andMe’s problems underscore tech firms' struggle to effectively sell “big data” promises.

They also offer a cautionary tale on how not to handle data breaches. Last year, hackers stole ancestry data from 7 million 23andMe users. The company responded by telling them they should have been more careful with their passwords.

Investigations quickly revealed the breach, now the subject of a class-action lawsuit, was more sinister than most data theft. The hacker reportedly targeted people of Jewish and Chinese ancestry and then peddled their full names, home addresses and birth dates on the dark web.

23andMe’s problems also echo others caught in the SPAC bubble fallout, with Fast Company reporting at least 21 bankruptcies and $46 billion in investor losses.

Wojcicki currently owns about 20% of the total outstanding shares, entitling her to 49% of the voting power of the total outstanding shares.

In 23andMe’s most recent quarterly results, revenue sank 33% to $44.7 million, down $66.9 million in the third quarter of fiscal 2023. The company attributed much of that to wrapping up a collaboration with GSK. (However, it also announced a new $20 million win from GSK, marking the sixth year of partnership with the pharmaceutical giant.) And quarterly losses soared to $278 million, compared to a net loss of $92 million for the comparable period.

Rival Ancestry.com, owned by the Blackstone Group, the world’s largest alternative asset manager, is the global leader in consumer-facing genealogy, with over 3.6 million subscribers. At the time of the 2020 acquisition, Blackstone said Ancestry’s annual revenues topped $1 billion.