What happened

Shares of Novavax (NVAX 5.30%) slipped as much as 23% this week, according to data from S&P Global Market Intelligence. The COVID-19 vaccine maker missed earnings and revenue estimates for the fourth quarter, causing investors to sell off the stock once again. The share price is now down 90% over the past year after soaring as much as 2,000% during the beginning of its COVID vaccine rollout.

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So what

On February 28, Novavax released its financial results for the last three months of 2022. Revenue was $357 million in the period, up 61% year over year, while the company's net loss narrowed to $182 million compared to $846 million in 2021. However, both these numbers missed analyst expectations, with Wall Street predicting the company to hit $378 million in sales and a net loss of $0.92 per share (net loss per share was $2.28).

A company missing earnings and revenue estimates never makes the investment community happy, so it is no surprise to see shares of Novavax down big this week.

Besides these disappointing financial results, Novavax made some concerning statements about its business as it heads into 2023. Management said there is significant uncertainty regarding its 2023 revenue, with the company not sure whether it can stay in business if things don't go its way. Its funding agreement with the U.S. government was not extended beyond December of 2023, indicating that the U.S. is moving past its initial COVID-19 vaccine strategy as the world eases out of the pandemic. This puts $416 million in funding for the company at risk.

Second, Novavax has an arbitration case with a vaccine group called Gavi, which gave Novavax $700 million in funding. If Novavax loses this court case, it could be required to pay back all or a portion of the money it received from the group.

Now what

Even after these funding overhangs get decided, Novavax's business is in a precarious position. The COVID-19 vaccine market is highly dynamic, and it is unclear whether the company can keep up with vaccine development for new strains in time to bring them to market. There are also fewer people taking COVID-19 vaccine shots the further away we get from the initial COVID outbreak, putting into doubt how large this market will be a few years down the line.

At a market cap of around $615 million, Novavax stock looks cheap if the company can remain in business and sell a steady amount of vaccine doses each year. But nobody knows for sure whether that will be the case.