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Is the Omicron Surge Helping These 2 Nasdaq Stocks Recover?

By Dan Caplinger – Updated Dec 17, 2021 at 11:42AM

Key Points

  • Zoom and Novavax saw big gains on Friday.
  • Fears of the omicron COVID-19 variant might be providing those stocks with a short-term boost, but investors need to consider the longer-term implications.

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Zoom and Novavax remain well below their pandemic-era peaks.

The stock market continued to exhibit turbulence on Friday as investors grappled with a variety of macroeconomic, geopolitical, and pandemic-related issues. The Nasdaq Composite (^IXIC) bounced back from an early drop of about 1.4% and was trading up by around 0.3% as of 2:35 p.m. ET.

The recent surges in COVID-19 cases across the U.S., Europe, and other parts of the world have once again made investors nervous about what the future could bring. In response to the omicron variant in particular, some jurisdictions are starting to impose restrictions that are reminiscent of those enacted in the early days of the pandemic.

But shares of Zoom Video Technologies (ZM 0.16%) and Novavax (NVAX 0.50%) were on the rise Friday. Both of those stocks have endured serious declines from the peaks they hit earlier in the pandemic as their previously explosive business growth has slowed. So how much are they being affected by omicron-related concerns now, and what other factors are in play?

Person at desk on Zoom call with a dozen participants.

Image source: Zoom Video Communications.

Zooming higher

Shares of Zoom Video Technologies were up by 9.1% Friday afternoon. The video-collaboration software platform provider remains down by more than half just since early August, though, even with that gain.

Zoom enjoyed an explosion in popularity at the beginning of the pandemic as businesses, schools, and other organizations made quick transitions toward remote work and participation. As businesses have reopened and students have returned to classrooms, however, Zoom inevitably has seen its growth rates  slow. That has raised questions about its long-term future.

Moreover, competition remains a significant factor. Microsoft (MSFT -2.58%) has a similar service -- Microsoft Teams -- and the fact that it's part of the software giant's office productivity suite gives a large number of potential customers an obvious alternative to Zoom.

Nevertheless, Zoom has ambitious plans that include international expansion, broadening its product lineup with offerings like Zoom Phone, and looking for new ways to help companies adapt to the likely hybrid future of work. None of those potential catalysts are dependent on the pandemic continuing. It could take years for Zoom to capitalize on the full potential of those opportunities, and that's why bullish long-term investors are optimistic about the company's stock.

Novavax gets a win

Novavax shares were up by an even-better 11%. For the vaccine maker, this upward move was far less about omicron and far more about great news from regulators regarding the company's immediate future.

Novavax announced that the NVX-CoV2373 vaccine for COVID-19 that it developed in partnership with the Serum Institute of India has been granted an Emergency Use Listing by the World Health Organization. That should help Novavax start to move forward with its nearly year-old plans to supply more than 1 billion doses of its vaccine to the COVAX global vaccine initiative for low- and middle-income nations. Overcoming that regulatory hurdle was necessary in order to make NVX-CoV2373 eligible for export to many countries around the world.

Investors are optimistic that Novavax's vaccine will get similar clearance elsewhere. Some of those following the company say that it could get approval from regulators in the European Union as soon as next week, while the company and its partners are also looking to move forward expeditiously in nations such as Japan and the United Arab Emirates. A filing in the U.S. is also likely before 2021 is over.

One-day stock moves aren't important in the grand scheme of things, and despite the dangers posed by the omicron variant, markets have proven resilient in the past. Companies that have been especially useful during the pandemic will have to pivot eventually to ensure their growth stories don't reverse themselves as the fight against COVID-19 continues.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Dan Caplinger owns Microsoft and Zoom Video Communications. The Motley Fool owns and recommends Microsoft and Zoom Video Communications. The Motley Fool has a disclosure policy.

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