Could Novavax Stock Help You Become a Millionaire?

Novavax (NVAX 2.95%) is an investment that can look incredibly successful or awful depending on when you bought shares of the company. If it was during the early stages of the pandemic and before it developed its COVID-19 vaccine, you're sitting on some great profits. But if you only bought the stock a year ago, there may not be much left of your investment.

It has been a volatile stock to own, to say the least. Down 89% from its 52-week high, is now an optimal time to invest in Novavax? And can its potential returns make you a millionaire in the future?

Here's what kind of return you would need on the stock to become a millionaire

Let's assume that you are planning to invest $25,000 into shares of Novavax. To get to $1 million, the stock price would need to increase 40 times from current levels, and that's unlikely to happen over a short period. So, I'll also assume an investment (or holding) period of 25 years.

Here's a breakdown of how much that investment could be worth at various average per year returns over a 25-year period:

Data source: Calculations by author.

Without investing more money or holding your investment for longer, you would need the stock's annual returns to be around 16% per year to hit the $1 million mark. That's well above the S&P 500's long-run average of 10%.

Can Novavax deliver those kinds of returns?

For Novavax to generate a 16% return consistently for 25 years, the company would likely need to develop at least a few highly successful and profitable products during that time to get growth-oriented investors extremely bullish on its prospects. 

Today, the company generates revenue primarily from its COVID-19 vaccine, NVX-COV2373. It's working on a vaccine for the omicron variant and also has vaccines in its pipeline to treat the flu and respiratory syncytial virus (RSV).

But there's nothing exciting enough in that pipeline right now to suggest Novavax will deliver strong sales and profit numbers in the future. Revenue from COVID-related products is uncertain and ultimately depends on how long there will be demand for vaccines and booster shots. For 2022, Novavax projects revenue of about $2 billion.

It has other products in its pipeline, but there isn't anything overwhelming in there that is likely going to transform this into a company that's worth tens of billions of dollars. NanoFlu, for instance, may achieve peak annual sales between $550 million and $1.7 billion. ResVax, its vaccine for RSV, could generate over $2 billion in revenue.

Those are some promising products to build around, but Novavax will need a lot more to be a strong growth stock over many years.

Don't count on becoming a millionaire with Novavax

At where the business is today, Novavax doesn't appear to be the type of investment that can deliver 40x returns in the long run and help you become a millionaire. At best, it's a risky contrarian investment that could have a lot of upside -- multiple analysts have set price targets within the past few months suggesting that the stock could triple in value.

At worst, however, its shares could plummet further in price. The best-case scenario for investors at that point becomes that a larger healthcare company buys out the business.

For most investors, especially those who aren't comfortable taking on significant risk, this isn't a stock that would make sense buying right now.