The DNA test kit that once made Oprah’s list of favourite things (alongside sheepskin slippers and pre-made chicken pies) has fallen on tough times.
What happened: 23andMe CEO Anne Wojcicki is planning to take the company private following a disastrous three years, during which its valuation crashed ~98%. The company’s stock has fallen so far that it has been on the verge of being delisted from the Nasdaq.
Catch-up: Five years ago, 23andMe was considered one of the buzziest startups in the world. Millions of people were using the kits, sharing their results online, and buying them as Christmas gifts for their friends and family, lifting the company to a valuation of US$6 billion.
- The company poured over $1 billion into developing new drugs and pricey health subscriptions based on people’s DNA results, but has never turned a profit.
- Waning interest in the ancestry kits, coupled with a high-profile hack last year that compromised ~7 million customers' DNA, took its toll on the company’s outlook.
Why it matters: Famous friends and deep-pocketed investors couldn’t help 23andMe overcome a fundamental problem: People don’t need more than one DNA test. Once the novelty faded (and people stopped dressing up as tests for Halloween), interest faded.
What’s next: The company could be out of cash by next year, putting pressure on Wojcicki to keep the company afloat until it can at least bring one of its new drugs to market.—LA