While the COVID-19 pandemic has caused upheaval throughout the world, it has also served as a major catalyst for some stocks. You can definitely include Moderna (NASDAQ:MRNA) in the group. The biotech's shares have more than tripled year to date and at one point more than quadrupled.

This kind of meteoric rise tends to prompt some investors to wonder if they should buy Moderna. Others who invested in the biotech stock early on might be asking themselves if it's time to sell or if they should hold onto their shares.

Should you buy, sell, or hold Moderna stock? Here are the arguments for each move -- and what appears to be the best approach overall.

Hands holding a paper fortune teller with buy, sell, hold, and a dollar sign on each of the four sections

Image source: Getty Images.

Why buy Moderna stock?

There's really only one reason to buy any stock: You expect that it will generate market-beating returns. Can Moderna potentially deliver market-beating returns? Sure it can.

The company's COVID-19 vaccine candidate mRNA-1273 is obviously receiving the most attention right now. Moderna is, without question, one of the leaders in the race to develop a COVID-19 vaccine. mRNA-1273 is already in a phase 2 clinical study. Moderna expects to begin a phase 3 clinical trial of the vaccine in July.

CEO Stephane Bancel recently told CNBC that he thinks there's a "high probability" of mRNA-1273 winning FDA approval, putting the chances in the ballpark of 80% to 90%. If Bancel is right, Moderna could be on the way to making billions of dollars, perhaps even tens of billions of dollars, from its COVID-19 vaccine.

Don't forget the biotech's other pipeline candidates, though. Moderna's cytomegalovirus (CMV) vaccine candidate mRNA-1647 is in phase 2 testing. If mRNA-647 is successful in clinical testing, it could be a big winner as there is no currently approved CMV vaccine.

Moderna also has a couple of other partnered programs in phase 2 studies -- personalized cancer vaccine mRNA-4157 being developed with Merck and AZD8601, which AstraZeneca is testing as a treatment for coronary artery disease. The biotech's pipeline includes 12 mRNA programs in early stage clinical trials.

Reasons to sell

Why seriously consider selling your shares of Moderna? Some investors like to take profits off the table after a stock generates big returns as Moderna has. That's not necessarily a bad move, although it's nearly always better to let winners keep winning as long as nothing has changed about their growth prospects.

The main reason to think about selling Moderna is if you think its growth prospects don't justify its valuation. Moderna's market cap now stands above $23 billion. Expectations of tremendous sales growth (Moderna only made around $60 million last year) are baked into the share price.

If you are afraid that mRNA-1273 will stumble in clinical testing, selling Moderna now makes sense. There's certainly a risk that this could happen despite Stephane Bancel's optimism.

A lot rides on Moderna's phase 2 study. A vaccine in phase 2 testing historically has less than a 1-in-4 chance of winning FDA approval, based on data analyzed by biopharmaceutical industry organization BIO. However, vaccines that make it to phase 3 clinical trials have a 74% chance of FDA approval.

The case for holding

For investors who already own Moderna stock, probably the easiest thing to do is to hold on for the ride. If you bought the stock for its long-term prospects, there's no reason at this point to think those prospects have been diminished.

What about the potential for other drugmakers to succeed with their COVID-19 vaccine candidates? It could happen. Actually, I suspect it will happen. And it could lower Moderna's growth prospects, perhaps significantly.

Market demand should be great enough to support multiple COVID-19 vaccines, though. Still, this likelihood for increased competition could be a good reason to hold off on adding to your position in Moderna even while you hold onto your existing shares.

Another reason why you might want to hold Moderna rather than buying more shares or selling is if your position now makes up too large of a percentage of your overall portfolio. Different investors will be comfortable with different levels of exposure to one stock, but my view is that it's best to not have much more than 15% of your total portfolio invested in a given stock.

The best answer

So what should you do with Moderna stock -- buy, sell, or hold? The best answer is... it depends.

If you already own shares of the biotech, your smartest move will depend in large part on how large your position is. If it's substantial, adding to your position probably isn't advisable. If your Moderna shares have become a bigger part of your overall portfolio than you're comfortable having in one stock, selling a portion of your position is a good thing to do.

On the other hand, if you don't already own Moderna stock, I think that buying shares isn't a bad idea. There's still plenty of risk associated with the stock, so my view is to keep any position relatively small. If Moderna achieves its potential, a small stake will be all you need to reap big profits over the long run.