AltIndex Predicted 23andMe’s Collapse Months in Advance Using Alternative Data

March 25, 8:42 am

Back in August 2023, we issued a sell signal on 23andMe, warning our members that the company’s trajectory was looking increasingly bleak. That call wasn’t based on gut feeling - it was driven by a clear trend in alternative data that showed a company in decline. Now, almost 18 months later, 23andMe has filed for bankruptcy, validating the data-driven approach we take at AltIndex.

The Warning Signs Were Clear

While many investors continued to hold onto hope for 23andMe, our algorithm picked up on several red flags across key alternative data indicators:

• Mobile App Downloads: A consistent drop in downloads for the company’s apps pointed to shrinking customer interest.
• Web Traffic: Visits to 23andme.com were steadily declining, a strong signal that the company was losing consumer engagement.
• Social Media Followers: Facebook and Twitter followings were decreasing, showing reduced brand reach and public interest.
• Employee Sentiment: Internal signals such as a deteriorating business outlook among employees suggested low morale and a lack of confidence in the company’s future.

We highlighted 23andme's drop in business outlook in the article 23andMe's Business Outlook Tanks by 50% - is it time to buy or sell? in August 2023

Each of these signals on their own might not seem disastrous. But when they all move in the wrong direction at the same time, it tells a much bigger story - a story our algorithm doesn’t miss.

Back then, ME stock was trading at $29 per share. We warned our members early. Today, the stock is down over 97%, trading at just 73 cents after plunging more than 50% in a single day.

What Happened to 23andMe?

On Monday, 23andMe filed for Chapter 11 bankruptcy in the U.S. after struggling with weak demand for its once-popular ancestry testing kits. A 2023 data breach that compromised customer information further damaged the company’s brand and trust with users.

Co-founder Anne Wojcicki, who had made several failed bids to take the company private, resigned as CEO. The company announced it will continue operations during the sale process after securing $35 million in financing over the weekend. As of now, no other buyers have been confirmed.

Why Alternative Data Matters

This case is a perfect example of how traditional metrics- like revenue and earnings - often lag behind the real-time signals captured by alternative data. By the time quarterly reports are released, it’s often too late.

At AltIndex, we track thousands of companies and evaluate hundreds of real-time signals, including:

• App usage and downloads
• Website traffic trends
• Social media growth and engagement
• Hiring activity
• Employee sentiment

This layered view of a company’s health gives investors a crucial edge. The sell signal on 23andMe was one of many we’ve delivered ahead of market moves.

What Investors Gained

Investors who acted on our September 2023 sell signal and exited their positions in 23andMe at $29 preserved nearly all of their capital. Those who went short or bought put options could’ve made significant returns as the stock plummeted to under $1.

Once again, this shows that alternative data isn’t just a nice-to-have—it’s a must-have for modern investors.

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