The stock market recently took a big hit after the coronavirus, a sickness that first spread from China, started popping up around the globe. Concerns about the potential for an epidemic have everyone paying attention—investors included—and that has slowed stock market growth.
But in every situation, no matter how tragic, is opportunity. The coronavirus is no different; a pharmaceutical company has developed a vaccine and has sent it to U.S. government researchers, sending the company’s stock soaring.
On February 26, the day it was revealed that Moderna Inc (NASDAQ:MRNA) had indeed shipped a potential coronavirus vaccine to U.S. researchers for testing, its share price rose by more than 20% by early afternoon. More impressively, the company was able to get that vaccine out in just six weeks. (Source: “Biotech company Moderna says its coronavirus vaccine is ready for first tests,” CNN, February 26, 2020.)
Now, to be fair, we don’t know how effective (if at all) the vaccine will be, but its potential to be a ward against what otherwise could become a pandemic is a lucrative prospect indeed.
Chart courtesy of StockCharts.com
Moderna is a U.S. biotech firm that, other than its recent coronavirus vaccine, has had troubles on the stock market.
The company’s latest quarterly earnings report showed a net loss of $124.2 million, although that was actually an improvement from the loss of $141.4 million in the same period a year earlier. (Source: “Moderna Reports 2019 Fourth Quarter and Full Year Financial Results and Highlights Advancements in Core Modalities,” Moderna Inc, February 26, 2020.)
Revenue, however, tumbled sharply by 60% from $35.4 million in Q4 2018 to $14.1 million in Q4 2019.
In other words, MRNA stock was in need of a win. The company’s coronavirus vaccine has the ability to be just what the doctor ordered. The initial trials for the vaccine will begin in April, but the process of testing and approvals will take at least a year.
And therein lies the opportunity for investors who missed out on the February 26 surge.
If the coronavirus turns out to be as dangerous as some are expecting, then we could see Moderna’s vaccine become the first line of defense against it.
In that situation, we could anticipate Moderna stock surging by far more than 20%. I could see MRNA stock doubling in value depending on how widespread the coronavirus becomes and how potent the vaccine proves to be.
Again, this is all conjecture at this point, but the potential is there for a massive rise in the price of Moderna stock. I’d go so far as to say that, overnight, Moderna stock became a must-watch pharmaceutical stock due to its high potential.
So far, the coronavirus has infected over 80,000 people worldwide. Moderna’s vaccine could save hundreds of thousands—if not millions—of people from becoming infected.
Now, like with any pharmaceutical drug, comes the lengthy trial and test process. Furthermore, due to the sudden and severe nature of the coronavirus, we can anticipate many other pharmaceutical companies trying to develop a vaccine of their own.
While Moderna Inc has the benefit of being a first mover, the company that develops the most potent form of the vaccine will likely be the biggest beneficiary on the stock market.
Moderna’s track record when it comes to vaccines, it bears noting, is not fantastic, but this could be the breakthrough it needs. If all the cards align for MRNA stock, we’re talking exponential growth, with gains of more than 200% not out of the question.
The reason for all this deserved hype is the nature of the coronavirus; it’s fast spreading, deadly, and has caught the media’s attention.
People around the world are concerned about the potential harm that the virus could wreak. Furthermore, aside from the human toll that the disease is exacting, there’s the economic worry that has spilled over to the stock market, sending share prices across the board falling.
This is bad news all around. Therefore, any sort of effective prevention of the illness would be highly valued.
Again, the pharmaceutical approval process is a lengthy one with twists and turns and false starts, but if Moderna Inc proves able to combat the coronavirus, we could anticipate big things from Moderna stock.
Coronavirus Concern Hurts Stock Market
Like many diseases that have received tremendous media coverage in the past, the coronavirus is likely not the end of the world.
We’ve seen diseases come and go and, while the media likes to play up the “end of the world” angle in order to grab eyeballs, this virus is likely not the second coming of the Black Plague.
Still, the media’s intense fixation on the coronavirus has certainly caused a pandemic of worry. In that regard, there’s a lot of momentum building behind finding a cure or prevention. A successful cure or vaccine would itself cause a huge media firestorm, which in turn would be fantastic for the share price of the company that provides it.
So that is what makes a coronavirus vaccine such a hot-ticket item. The company that is able to combat the disease the best will receive a huge amount of attention and goodwill, which would likely lead to big gains on the stock market.
If Moderna Inc is the one to do it, then we could expect to see the gains from MRNA stock to roll in fast.
Businesses thrive off the simple principle of supply and demand. In the most basic sense, all that means is identifying a need in the market and then going out and satisfying that need.
Right now, we need some sort of remedy for the coronavirus as soon as possible, and that’s what Moderna Inc hopes to provide.
It’s by no means a guaranteed success, and drug testing is a lengthy and arduous process, but if it works out, we could see MRNA stock skyrocket—especially if the coronavirus epidemic proves to be as bad as some believe it could be.
Which is to say that Moderna stock is volatile right now, but it could end up providing big gains to investors.