23andMe (ME) is a genetic testing company that provides individuals with their DNA-based ancestry records. This company has the second-largest ancestry database after AncestryDNA, but has been struggling due to waning demand for one-time-use DNA kits.
Moreover, a 2023 data breach exposed 6.9 million users’ data. The data breach eroded trust and led to a $30 million lawsuit settlement. By late 2024, 23andMe laid off 40% of its workforce and shuttered its drug development arm. ME stock then plunged below the Nasdaq $1 listing requirement, and all independent board members resigned over disagreements with CEO Anne Wojcicki’s privatization push.
On March 23, the company filed for Chapter 11 bankruptcy in Missouri.
23andMe’s Bankruptcy
After the company filed for bankruptcy, Wojcicki resigned but has stayed on the board as the company is going private. Wojcicki intends to bid on the company as part of the bankruptcy process. 23andMe secured a $35 million debtor-in-possession loan to operate during the sale process and has estimated liabilities between $100 million and $500 million.
ME stock plunged nearly 60% on March 24 in the wake of the bankruptcy filing.
Why 23andMe Is Surging Now
Bloomberg reported that Bankruptcy Judge Brian C. Walsh approved 23andMe’s plan to auction its genetic database. This is the company’s most valuable asset, as it contains 15 million users’ DNA data.
Shares surged immediately and gained 45% on March 27. As of this writing, they are up 26% from their 5-day low. The judge delayed the final sale hearing from June 2 to June 17 to allow creditor input.
Why You Should Run, Not Buy
The company’s market cap right now is at $20.7 million. Once all of its debts have been paid, such as through a sale of its business, investors could get a payout. Time to jump in, right? Not so fast.
23andMe hasn’t turned a single cent of profit in its history, and the current sale is less of a “sale” and more of a last gasp to pay off debt and maybe leave a few crumbs for shareholders. Paying hundreds of millions for a company (to cover its debt) that lost $59 million on revenue of $44 million in its fiscal Q2, especially when the brand reputation has tumbled due to recent drama, makes little sense.
Chances are that 23andMe’s sale will not leave anything extra for common stockholders. Even if it does, the payout could be pennies, as common stockholders are last in line during bankruptcy proceedings, below secured and unsecured creditors and preferred stockholders.
For context, Wojcicki’s highest proposal to take the company private was $74.7 million in February 2025. Her latest pre-bankruptcy offer of $11 million is even lower. This does not bode well for common stockholders. The final reorganization plan will give common stockholders insights into how their rights will be handled.
