Forbes has dethroned the richest self-made woman in America and removed her name from all its wealth lists, the business magazine announced Wednesday morning.
In light of her company's recent difficulties, Forbes revised the estimated net worth of Elizabeth Holmes, founder and CEO of Palo Alto, Calif.-based blood test startup Theranos, to $0 from $4.5 billion, removing her from the No. 1 spot on its list of "America's Richest Self-Made Women." It also revised Theranos' net worth to a fraction of its original valuation, downgrading it 91 percent.
The Forbes estimate of Ms. Holmes wealth is based on her 50 percent stake in Theranos, which she holds as common stock. Her investors hold "participating preferred shares," which means they have precedence to Ms. Holmes' stock if the company is liquidated, according to the report.
Based on the storm of negative news, investigations and lawsuits the company now faces, as well as insider information that Theranos revenues are less than $100 million, Forbes reduced its estimate of the company's net worth to $800 million from $9 billion. The business publication arrived at this number based on the $724 million Theranos has raised in venture capital, its intellectual property and a multiple of its sales.
"At such a low valuation, Holmes' stake is essentially worth nothing," wrote Forbes staff writer Matthew Harper.
Forbes wrote that the company's secretive business strategy, inability to deliver on its promises and potential lack of a target market support its decision to lower its value estimate of Theranos.
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