In 2015, Theranos CEO and founder Elizabeth Holmes topped Forbes’ list of America’s Richest Self-Made Women with a net worth of $4.5 billion. However, this year Forbes has lowered estimates of her net wealth to nearly zero dollars.
The estimate of Holmes’ wealth is based entirely on her 50% stake in Theranos, the blood-testing company. Theranos shares are not traded on any stock market. So the company’s value is generated from investments. Forbes notes that apart from the company’s valuation figure, too much is unknown about Theranos.
Forbes spoke to venture capitalists, analysts, and industry experts and concluded that a more realistic value for Theranos is not over $800 million. This value includes intellectual property and the investments of $724 million the company has raised. It also represents a generous multiple of the company’s sales, which Forbes found out about from a source familiar with Theranos’ finances.
At such a low assessment, Holmes’ stake is virtually worth nothing. Theranos investors own preferred shares. It means they are the first to get paid in case Theranos is sold or goes bankrupt. Elizabeth Holmes, who owns common stock, is unlikely to withdraw anything of those $800 millions.
In late 2015, The Wall Street Journal discovered a mismatch between expert estimates and the dubious figure of $9 billion allegedly evaluated by private investors.
