Please ensure Javascript is enabled for purposes of website accessibility

Why Novavax Shares Are Soaring Today

By Keith Speights - Feb 10, 2020 at 12:36PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Concerns about the coronavirus outbreak could be causing short-sellers of the biotech stock to really worry.

What happened

Shares of Novavax (NVAX 11.12%) 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.

Gloved hand holding a vial with a label showing "Coronavirus" with a check in a box next to a plus sign

Image source: Getty Images.

So what

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.

Now what

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Novavax, Inc. Stock Quote
Novavax, Inc.
$57.15 (11.12%) $5.72

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.