VG Acquisition (NASDAQ:VGAC) shares are starting to perk up Wednesday on rumors of a 23andMe SPAC merger. Is that in the cards for the blank-check company from Sir Richard Branson? And if it is, what should you know about VGAC stock now?
To start, investors should know that VG Acquisition is a blank-check company from Virgin Group founder Branson. VGAC stock has continued to captivate investors, especially on hopes Branson would it use to bring Virgin Orbit or Virgin Hyperloop public. Space exploration has been a particularly salient trend in recent weeks thanks to Ark Invest.
However, Bloomberg reported today that VGAC stock may be headed in another exciting direction. According to the rumors, VG Acquisition is in talks to bring 23andMe public. For those unfamiliar, 23andMe is a consumer DNA-testing company that provides incite on ancestry and healthcare. Also according to the rumors, a 23andMe SPAC merger could be worth $4 billion. That factors in a 2018 valuation for the DNA-testing company of $2.5 billion.
VGAC stock faced a trading halt earlier on Wednesday, after rocketing up more than 18%. Shares are now up slightly more than 1% at a price near $13.80.
But what does a potential 23andMe SPAC merger really mean for VGAC stock? The company is certainly familiar to consumers, and it recently expanded its offerings to include a Covid-19 risk assessment. Releasing the test on Wednesday, 23andMe says it can help determine if an individual is likely to need hospitalization if they contract Covid-19. However, 23andMe and its other DNA-testing rivals have faced setbacks. As Bloomberg also reported, these companies cut jobs at the start of 2020 as privacy concerns started to weigh on the business.
VGAC Stock and a 23andMe SPAC Merger
As investors consider VGAC stock and a potential 23andMe SPAC merger, there are a few things to consider. The first is the long-term potential for these consumer DNA-testing companies. Privacy concerns and a slump in consumer genomics sales have hit the industry. That means as 23andMe looks to come public, it needs to have a plan for growth. The newly released Covid-19 Severity Calculator looks to be its best bet at the present moment.
Taking data from over 10,000 Covid-19 trial participants, the calculator works to predict likelihood of hospitalization. Users can input their ethnicity, lifestyle, weight, height, health conditions and genetics, and an algorithm will do the rest. Presumably, such a calculator will no longer be as relevant once the world gets the pandemic under the control. However, it does suggest a move back to healthcare for 23andMe. Prior to focusing on ancestry testing, the company started with a $1,000 health conditions kit. It was forced to pivot after facing U.S. Food and Drug Administration concerns.
This ties into a second thing to watch. Although Ark Invest has identified space as a trend, making a Virgin Orbit SPAC merger interesting, the firm is also bullish on gene-editing and genetic testing. If 23andMe can grow more toward healthcare testing, perhaps it can unlock real innovative potential for VGAC stock.
So what should you do here? Recent news should indicate just how volatile this yet-to-be confirmed deals can be. Keep an eye on VGAC stock, and wait for confirmation of a 23andMe SPAC merger.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.