Moderna loses $140 billion – can the pharma giant bounce back?
Shares of Moderna crashed on February 14 following a downward trend affecting all Covid-19 vaccine-makers. Moderna led a turbulent medical/pharmaceutical market decline, with its stock hitting its lowest level in nearly a year. The reason for this is simple? Vaccine sales are dwindling as COVID19 cases are declining.
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Today, we look at Moderna ahead of its Earnings Report later in February.
Moderna was one of 2021’s top-performing stocks, earning billions from its global vaccine sales. In February 2022 its stock has crashed more than 70% from its all-time high in August 2021 to a 10-month low of less than $140 on February 14. Much like the tech sector, healthcare firms saw a huge sell-off at the start of January 2022.
CEO loses faith, so do shareholders
Moderna’s losses also follow a series of alarming regulatory filings in February which revealed that four of the company’s executives, including its billionaire CEO Stéphane Bancel, sold a combined 23,281 shares for the equivalent of $3.6 million.
Bancel sold 19,000 shares to net about $3 million. The findings rocked shareholders who similarly sold their stock.
The huge selloff resulted in more than $140 billion wiped from the company’s market capitalization, which is reportedly $61,55 billion. The company has somewhat recovered and as of February 17 is trading at $151.81, however it’s still a far cry from a record high of $484 in August 2021.
Vaccine revenue stream dries up
Moderna isn’t the only pharmaceutical giant affected by this swing in fortunes; Pfizer has warned in its fourth-quarter earnings report that vaccine sales will slow in 2022.
It all comes down to a business dilemma – As vaccines are rolled out, cases will drop, and demand will decrease. It’s an unsustainable model. With Covid cases decreasing from all-time highs experienced in 2021 due to the deadly Delta variant, experts have questioned whether vaccines can be a sustainable revenue stream. Covid-19 vaccines have proven to be highly effective in preventing serious illness and deaths; a boon for the global economy hoping to recover soon but bad for pharma companies.
Many pharma companies, including Moderna, are banking on the endemic phase of the virus; localized flare-ups in countries as was the case with SARS and bird flu in Asia. Another potential lucrative market for Moderna is its development of effective cold/flu vaccines which it will roll out in 2022.
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Another focus for Moderna is the application of its mRNA technology, which worked incredibly well, against Covid-19, to develop treatments for cancer and rare diseases. It’s a long-term plan but could be much more sustainable for the company. Considering its relatively low price and its prospects, Moderna could be a buying opportunity.
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