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Why Moderna Stock Lost 33% in January

By Jeremy Bowman - Feb 8, 2022 at 11:20PM

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A sell-off in growth stocks and a setback for a vaccine mandate pushed the stock lower.

What happened

Shares of Moderna (MRNA 1.35%) were falling in January as the biotech stock was affected by the broad sell-off in growth stocks, and as investors seemed to fear that the company's tailwinds from its COVID vaccine may have peaked. Company-specific news last month was mixed, though there were some positive steps, including full authorization from the FDA for its COVID vaccine.

According to data from S&P Global Market Intelligence, the stock finished the month down 33%. The shares fell steadily through most of January.

^SPX Chart

^SPX data by YCharts

So what

Moderna dropped sharply over the first three sessions of the month, falling 15% with a broader sell-off in growth stocks as investors reacted to expectations of rising interest rates, which make growth stocks less attractive. While Moderna stock currently trades at a low price-to-earnings ratio, that's because of bumper profits from its COVID vaccine and investors expect those to fade away over the coming years.

A vial labeled Covid-19

Image source: Getty Images.

Still, Moderna is different from the typical growth stock, as the potential for more breakthroughs could easily propel the stock higher, and it's difficult to predict the company's future cash flows. 

The stock briefly recovered some of its losses on Jan. 10, rising 9% after CEO Stéphane Bancel said the company's omicron booster vaccine would enter trials soon and that it was making 2 billion to 3 billion booster shots this year.

However, Moderna shares began another retreat on Jan. 1,3 when the U.S. Supreme Court ruled that the Biden administration's vaccine mandate for large businesses was unconstitutional.

Finally, the stock ended the month on an upswing as growth stocks rallied; it got an upgrade from Deutsche Bank, and its Spikevax COVID vaccine was given full approval by the FDA on Jan. 31.

Now what

With the stock down more than two-thirds from its peak in September, this could be a good buying opportunity for Moderna stock. The company has a number of different vaccine trials in the works on diseases, ranging from HIV to Zika to cancer. It's too early to know if any of them for come to fruition, but a breakthrough treatment for HIV or cancer would be a significant revenue driver, and the COVID vaccine proves that its mRNA technology works.

The company has $15 billion in cash and equivalents on its balance sheet and no debt. It's expecting around $22 billion in high-margin revenue in 2022, meaning it could have $30 billion in net cash a year from now. For a stock currently trading at a market cap around $60 billion, that looks like a great deal.

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