Fortune writer Dan Primack takes issue Thursday with how rival business magazine Forbes lowered the net worth of Theranos CEO Elizabeth Holmes to zero because of problems at the company.
Primack writes, “Forbes gave various explanations for its revisions ― which were breathlessly aggregated by other media outlets ― including that Holmes’ stake in her company is likely worthless, given that she holds common stock and there had been over $700 million in preferred shares issued to outside investors.
“Like other founders of privately-held startups, Holmes did not hold any liquid securities in her company. It’s possible that she sold some shares along the way ― as small secondary transactions alongside broader company fundraises ― to pay the mortgage or buy a car (even a nice car), but the vast majority of her holdings had little more than theoretical value.
“What’s perhaps more remarkable is that Forbes doesn’t seem to have realized its original sin. This year’s list includes several women whose ‘net worth’ also is tied to the opinions of a small group of outside investors. Jessica Alba probably has some Flipper and Dark Angel money in the bank, but the $340 million assigned to her by Forbes is largely based on how venture capitalists recently valued her retail startup, The Honest Co., at $1.7 billion.”
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