Is it safe to buy the 23andMe (ME) stock price dip?

23andMe (NASDAQ: ME) stock price has had a remarkable fall from grace amid sustained unprofitability and a recent hack that could cost it millions of dollars. After peaking at $18.15 in February 2021, the shares have plunged to below $1. This plunge has brought its market cap from over $6.97 billion to less than $500 million.

23andMe concerns remain

23andMe is one of the biggest companies in the genetic testing industry globally. The company offers ancestry solutions to millions of people around the world. Its solutions start at $79 while the most premium one goes for $159. It also has a subscription service that goes for $99 per month.

23andMe operates in an industry that has huge barriers to entry but one that is highly competitive. Its biggest competitor, Ancestry.com, was acquired by Blackstone in a $4.7 billion deal in 2020.

23andMe has not done well as a public company. For one, it is a massive cash incinerator that loses millions of dollars every month. Data compiled by SeekingAlpha shows that the company has lost over $1.14 billion in the past five straight years. Its total net loss in the trailing twelve months stood at over $336 million.

23andMe’s revenue growth has also retreated. Its recent results showed that its total revenue in Q2’24 showed that its revenue dropped by more than 33% YoY to over $50 million. This crash happened as the company ended its exclusive discovery term with GSK, the giant pharmaceutical company.

23andMe saw its total loss increase sharply during the quarter. It lost over $75 million and also lowered its forward guidance. It now sees its total revenue for the fiscal year falling to between $240 million and $250 million. 

23andMe is also going through additional challenges after a recent hack that affected over 5.5 million users who had opted-in to its DNA Relatives feature. Because of the sensitivity of the data 23andMe holds, this hack could have an impact on its operations.

In the past, hacks affect companies differently. The Equifax hack in 2017 had no major impact on the company because of the role the company plays in the financial services industry. In 23andMe’s case, it is possible that users will avoid it for security reasons.

23andMe stock price forecast

ME chart by TradingView

The daily chart shows that the ME share price has been in a strong downtrend in the past few months. It has dropped by more than 70% this year while the Nasdaq 100 index is up by more than 40% this year. 

The shares are also oscillating at the 50-day and 25-day moving averages while the MACD indicator has moved to the neutral point. Therefore, the outlook for the 23andMe stock price is bearish, with the next point to watch being at $0.7150, its lowest point on November 9th of this year.