Shares of Novavax (NASDAQ:NVAX) were soaring 15.1% higher as of 11:47 a.m. EST on Monday. The clinical-stage biotech hasn't announced any new developments. Rather buying pressure appeared to be driving shares higher as a result of investors viewing continued worries about the coronavirus outbreak as a positive for Novavax, which is developing a potential vaccine for the virus.
It's also important to note that there's a significant short interest in Novavax. Any upward movement for the stock increases the heat for short-sellers who are betting that shares will fall. It's quite possible that some short-sellers are covering their positions in Novavax, creating even more momentum for the stock.
What does all of this really mean to investors? Not much.
Even though the coronavirus is still a major health concern, there's no guarantee that Novavax will be successful in developing a safe and effective vaccine. Several other drugmakers are scrambling to develop vaccines and antiviral drugs targeting the coronavirus.
Also, it's not out of the realm of possibility that the current health scare will fade away as new cases of the coronavirus dwindle. Several times in the past, initial worries about a deadly virus becoming a severe global pandemic have proven to be overdone.
And if short-sellers covering their positions is fueling the fire for Novavax (as seems likely), today's gains could be only temporary. It's not uncommon to see a stock fall nearly as quickly as it jumped in cases where short-sellers' activity pushed the stock higher.
Investors should definitely monitor Novavax's progress with its coronavirus program. But the primary catalyst for the biotech stock is more likely to be the announcement of results from a late-stage clinical study of experimental flu vaccine NanoFlu. If those results are positive, it will give investors a much more solid reason to buy Novavax than speculation about the coronavirus outbreak.