Going public can sometimes go awry, especially for companies that went public via the SPAC route at the peak of the last boom.
Dozens of companies once valued at billions of dollars have seen their values plummet and their stock prices plummet into penny-stock territory. In response, a growing number of companies are opting to exit the stock market and try their luck again as private companies.
A few weeks ago, genetic testing provider 23andMe became the latest candidate to try this route. The company announced that it was considering acquiring all of the outstanding shares that CEO and founder Anne Wojcicki doesn’t currently own. Her offer comes after more than three years of mostly dismal performance on the Nasdaq, with the stock recently trading at about 50 cents a share.
23andMe isn’t alone. A string of struggling SPACs have announced plans to go private in recent months. Here are some notable companies:
View, a maker of smart glass for luxury buildings, announced last month that it had signed an agreement with investors to go private and restructure under Chapter 11 bankruptcy protection. Milpitas, California-based View had raised more than $1.8 billion in venture funding before going public in early 2021. It struggled when it first went public, with a history of losses and persistent doubts about its solvency. The board of Astra, a company that provides low-cost launch services for small satellites, voted in March to go private after three struggling years as a public company. The plan includes a sale to a parent company founded by Astra CEO Chris Kemp, CTO Adam London and other long-term investors. The Alameda, California-based company was most recently valued at about $15 million after listing on the Nasdaq in 2021 at a valuation of $2.1 billion. Berkshire Gray, a developer of robotics technology for warehouses, went public in July 2021 through a SPAC merger. Just 20 months later, the Bedford, Massachusetts-based company announced it would go private again after losing billions of dollars from its peak valuation. The plan was for existing shareholder SoftBank to acquire all remaining outstanding shares in a deal worth about $375 million. Greenlight Biosciences, a biotech company developing RNA products for health and agriculture, went public in early 2022, at the tail end of the SPAC boom, at an initial valuation of about $1.2 billion. It didn’t work out. A little over a year later, in May 2023, Medford, Massachusetts-based Greenlight announced it would go private through a group of investors led by existing shareholder Fall Line Capital in a deal that valued the company at $45.5 million.
None of these are post-IPO success stories, and their founders and early backers were no doubt hoping to generate more lasting enthusiasm in the stock market.
But going private is far from the worst option when you consider the options available when a stock price falls below $1. In most of the cases listed above, the newly private company is owned by the founders or long-term shareholders with a deep understanding of the business.
Plus, while no one wants to see valuations crash, there’s plenty of room for growth, at least at current levels.
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