23andMe's Business Outlook Tanks by 50% - is it time to buy or sell?

August 20, 5:43 pm

23andMe Holding Co. ($ME), the renowned personal genomics firm known for its direct-to-consumer genetic testing, has recently witnessed a turbulent stock performance. Currently trading at $1.14, the stock has tumbled a staggering 75% from its 52-week peak.

Signs of Waning Consumer Interest

Our recent analysis, on August 18, placed a "Sell" signal on 23andMe with a target price of $0.92. This signal emerges from multiple concerning indicators. Notably, there's been a prolonged reduction in the company's social media followers and a drop in job listings. But more telling is the sharp decline in mobile app downloads, with daily downloads estimated at around 1,100 – a 65% slump since January.

From an investor's standpoint, such a decrease in app downloads implies a potential decrease in new revenue sources. New downloads often mean new customers, new upsell opportunities, and increased engagement. With fewer downloads, it's reasonable to deduce that less fresh revenue is entering the company's ecosystem, posing a stark challenge for growth and profitability projections.

Employee Morale: A Rising Concern

Yet, beyond these metrics, a deeper issue lurks: plummeting employee morale. Over the past year, the company's business outlook has tanked by over 50% according to review sites such as Glassdoor and Indeed. Employees Insider perspectives indicate a palpable dip in culture and morale since 23andMe's public debut. Employees voice concerns about stagnating career trajectories, volatile priorities, an ambiguous business strategy, and an apparent leadership vacuum.

Historical data often underscores a crucial trend: companies displaying a diminishing business outlook typically lag behind those boasting a buoyant one. Given the current trajectory of 23andMe, coupled with a dearth of optimistic alternative data signals, our present stance leans towards a sell signal with a price target at $0.92, marking an 18% potential drop from its existing price.

Yet, as with all market insights, this isn't financial advice. Investors should exercise due diligence and conduct thorough research before making any investment decisions.

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