Novavax (NVAX -0.95%) has gone from being a relatively unknown healthcare company to being one of the most popular vaccine makers in the world today. Although investors may be discouraged by the stock's performance over the past year, when looking at a wider range, heading back to 2020, it has been an impressive run for the company. Below, I'll look at how much a $1,000 investment back then would be worth today and whether it's worth taking a chance on the stock right now.
The stock was trading around $4 at the start of 2020
On Jan. 2, 2020, shares of Novavax closed at $4.49. Investing $1,000 into the stock at the time would have enabled you to acquire approximately 223 shares of the company. This was before the pandemic and before the company's successful COVID-19 vaccine would be in development.
On Monday (Jan. 9), the healthcare stock closed at $12.12, which would put the value of those shares at $2,702.76, for a return of 170%. And that's with the stock crashing a mammoth 93% last year. The moral of the story is that when it comes to biotech, buying early can mean significant returns and volatility. But it doesn't always work out so well, as there's also plenty of risk in investing in unproven biotech stocks. At the time, Novavax was coming off a year in 2019 when revenue was just $18.7 million (primarily coming from grants), and its net loss was $132.7 million.
Where the stock is today
Over the trailing 12 months, Novavax has generated just under $2.4 billion with its COVID-19 vaccine, NVX-CoV2373, bringing in the bulk of its revenue. However, things haven't gone smoothly for the company; last year, the company slashed its forecast in half for 2022. Previously, it was projecting between $4 billion to $5 billion in revenue, and that figure will now be around $2 billion. And even despite the growth, the business remains unprofitable, with its net losses totaling a staggering $1.3 billion over the past four quarters.
Looking ahead, the future is hazy for Novavax as it has no other approved product besides NVX-CoV2373. And there's even more uncertainty now that there is a change in leadership at Novavax.
On Monday, the company announced that CEO Stanley Erck would be retiring this month. Erck has been in the position since 2011. John Jacobs, who is currently with Harmony Biosciences, will take over and will "bring a fresh perspective and deep industry expertise to Novavax." Although Harmony has generated less revenue over the past four quarters ($400.8 million) than Novavax, its market cap is $2.7 billion -- that is more than double the $1 billion Novavax is worth today. In addition to Harmony, Jacobs also previously worked in a senior leadership position with Teva Pharmaceuticals.
Should you buy Novavax stock today?
Novavax remains a risky buy right now. While the stock's COVID-19 vaccine has been a success, how much demand there will be for it in the future is an unknown that makes Novavax an untenable option for risk-averse investors. Even if there is a resurgence this year in COVID cases and revenue from booster shots helps make it a better-than-expected year for Novavax, that likely won't be a sustainable source of revenue for the long haul, which is a key reason investors have been bearish on it of late.
Under new leadership, there may be a different strategy (e.g., focusing on acquisitions), but it's far too early to tell at this stage if there will be a significant change in course for the company. And for that reason, I'd suggest taking a wait-and-see approach, given the stock's volatility.
