Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Vaxart Stock Is Under Pressure Today

By George Budwell - Oct 19, 2020 at 10:45AM

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

A federal investigation is weighing on the biotech's shares today.

What happened

Vaxart ( VXRT 4.64% ), a clinical-stage vaccine developer, is poised for a tough day today. Ahead of the opening bell, the biotech's shares dropped by as much as 9.9%. 

The culprit? Vaxart's stock is sinking this morning in response to an 8-K filed with the Securities and Exchange Commission (SEC) last Wednesday. In the filing, Vaxart revealed that it is currently under investigation by the federal government and the SEC for its prior claims about being selected by Operation Warp Speed (OWS). What's more, the company also released details regarding the ongoing class action lawsuits filed by some of its shareholders over the same matter.  

A schematic outlining the threat posed by the novel coronavirus

Image source: Getty Images.

Vaxart's shares have rebounded to some degree since the opening bell, but they are still down by 5.2% as of 9:46 a.m. EDT Monday. 

So what

Last June, Vaxart announced that its oral COVID-19 vaccine was selected to participate in OWS, the federal government's program to accelerate the development of vaccines and therapeutics to fight the virus. As a result, the biotech's shares shot up by a whopping 500% over just a three-week period in the summer.

Investors apparently took the press release in question to mean that Vaxart was in line to receive a large grant for its COVID-19 vaccine program. The truth, however, was that the company's vaccine was simply selected to participate in a nonhuman primate challenge study. Vaxart, in short, did not land a sizable award from OWS at the time of that particular press release. 

Now what

Is this dip a buying opportunity? Vaxart's press release over the OWS matter didn't explicitly state that the company had received a large award -- only that the primate challenge study would be sponsored by OWS. So it's hard to imagine that investigators will be able to definitively prove that the company purposely deceived shareholders in order to inflate its share price. That's the silver lining. 

Having said that, investors also need to understand that Vaxart's COVID-19 oral vaccine program is far from a sure thing. This developmental biotech stock, therefore, probably belongs only in the portfolios of the most aggressive of investors. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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

Vaxart, Inc. Stock Quote
Vaxart, Inc.
VXRT
$7.90 (4.64%) $0.35

*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 service.

Stock Advisor Returns
673%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2021.

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

Our Most Popular Articles

Premium Investing Services

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