Many consumer-oriented stocks rose dramatically on Monday due to promising results from an early coronavirus vaccine trial. The news lifted stock prices across sector lines and industries as investors jumped to bullish conclusions. For example, travel services specialist TripAdvisor (TRIP -1.78%) traded 14.6% higher at 12:10 p.m. EDT, while Ticketmaster parent Live Nation Entertainment (LYV -2.85%) reached a peak gain of 18.3% 45 minutes earlier, and restaurant equipment maker Middleby (MIDD -1.02%) posted a 9.9% increase at 9.50 a.m. EDT.
Quick access to an effective coronavirus vaccine would be great news for all of these companies.
- Live Nation has closed down its events and ticket sales until further notice, raising $1.2 billion of new debt last week in order to keep the lights on until this crisis has passed.
- TripAdvisor published 26% lower sales in the first quarter with an even weaker second-quarter outlook, because travel just isn't an option for most people these days. Daily trip bookings plunged 90% in late March and all of April.
- Fast-food restaurants with drive-through windows are doing alright, but sit-down dining chains are suffering in this climate. Take-out orders and home delivery options can't make up for lost sales at the premises, and you won't find most restaurant chains making investments in their food preparation equipment anytime soon. Kitchen equipment sales could drop as much as 85% this year, according to short-selling market analyst Prescience Point Capital Management, spelling doom for sector leader Middleby.
Operating under these Swords of Damocles, investors are looking for any sign of progress toward a solid vaccine, an effective treatment method for active COVID-19 cases, or any other event that would open the world to normal operations again. Today's positive trial results from coronavirus vaccine researcher Moderna (MRNA -0.55%) is a good example of investors looking for signs of normality.
Moderna's study results are promising, but we're still a long way away from having a safe and effective coronavirus vaccine for everybody. The company hopes to start a larger phase 3 trial in July if all goes well in the phase 2 study that is currently under way, followed by an accelerated FDA filing. In the best of all possible worlds, Moderna might be able to start producing the vaccine in early 2021.
So we're far from getting back to anything near last year's number of rock concerts, travel bookings, and sit-down restaurant meals. Middleby, Live Nation, and TripAdvisor have many months of rocky road ahead, even if Moderna (or other hopeful coronavirus vaccine developers) comes up aces in the upcoming level 3 trials.
That's why today's strong jumps fell far short of a full recovery. Live Nation is still trading 40% below January's all-time highs, Middleby's stock sits 55% below its 52-week peak prices, and TripAdvisor's investors are still nursing a 59% drop from last July's full-year zenith. I wouldn't be surprised to see them give up their recent gains based on negative COVID-19 reports along the way. Handle these fragile tickers with care until we actually have an effective vaccine available for everybody.