Why Moderna, BioNTech and Novavax Shares Crash This Week

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What happened

No news is often good news, and positive developments are almost always good news. But the main manufacturers of COVID-19 vaccines Moderna (NASDAQ: mRNA), BioNTech (NASDAQ: BNTX), and Novavax (NASDAQ: NVAX) saw their stocks crash this week despite news of positive developments or no news.

Moderna shares were down 10.2% for the week at market close on Thursday. BioNTech stock closed down 18.1% for the week and Novavax shares fell 16.5%.

Neither Moderna nor Novavax have announced anything that will affect their share price. The group’s big loser, BioNTech, and its partner, Pfizer (NYSE: PFE), has in fact had a positive development. On Tuesday, the companies submitted initial data to the United States Food and Drug Administration (FDA) for their COVID-19 vaccine in children aged five to 11.

What caused those vaccine stocks to collapse this week? Investors seem increasingly concerned about the impact on sales of COVID-19 vaccines once life returns to normal. The CEOs of Pfizer and Moderna have said in recent interviews that they expect the pandemic to end next year. BioNTech co-founder Özlem Türeci also said this week that COVID-19 “will become manageable”, with boosters needed perhaps every 12 to 18 months.

Image source: Getty Images.

So what

It really doesn’t make much sense that investor concerns about these stocks are so pronounced this week. There has been significant uncertainty for some time as to how long COVID-19 vaccine sales would hold near current levels.

Moderna and BioNTech are completely dependent on their respective COVID-19 vaccines for their income. If boosters are only needed every 12-18 months, as Türeci anticipates, both companies’ sales will likely decline a little after next year.

Novavax does not yet sell vaccines. However, the lower the frequency of required boosters, the poorer the company’s long-term outlook for its COVID-19 vaccine.

On the other hand, the delta variant has been in the forefront of the news for a few months. The number of new COVID-19 cases in the United States is on the decline again. While concerns about the decline of the delta variant, concerns about the future of vaccine stocks increase.

Now what

For investors betting on Moderna, BioNTech, and Novavax, the only thing to do is wait and see what happens with the dynamics of the COVID-19 vaccine market. Of the three, Novavax has the clearest catalysts. The company hopes to win the World Health Organization’s emergency use list for its vaccine. It also plans to file emergency use authorizations in several countries.

Perhaps the best chance for Moderna and BioNTech’s shares to bounce back is for companies to strike additional supply deals for 2022 and beyond. It would be particularly useful for their stock prices if more large countries signed agreements for 2023 and even until 2024.

However, there is also unfortunately another way for all three stocks to soar again. The emergence of deadly new coronavirus variants would likely translate into big gains for Moderna, BioNTech, and Novavax. Bad news for the world could be good news for vaccine stocks.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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