23andMe: Genetic testing firm files for Chapter 11 bankruptcy
CNNMAR 24
23andMe Files for Bankruptcy
Above: In this photo illustration, a 23andMe logo seen displayed on a smartphone and in the background. Image copyright: Photo Illustration by Avishek Das/Contributor/SOPA Images/LightRocket via Getty Images
The Spin
Narrative A
This bankruptcy filing represents a strategic move to reorganize and preserve 23andMe's valuable genetic database and customer base while addressing operational challenges. The court-supervised process provides the protection and structure needed to facilitate a successful sale and ensure continued operations. The company maintains strong potential for revival given its extensive DNA testing kit sales and established global market presence.
Narrative B
23andMe's decline from a $6 billion valuation reflects fundamental business model flaws and serious privacy concerns. The one-time purchase nature of DNA testing kits failed to generate recurring revenue, while the massive data breach severely damaged customer trust and resulted in significant financial penalties. The unsuccessful pivot to drug development and subscription services further demonstrates the company's inability to establish a sustainable business model.