What Sparked Moderna Stock Crash?

Forbes

a day ago

Moderna's stock (NASDAQ: MRNA) has fallen over 80% in the last year, primarily due to issues with its vaccine sales. Last year, the company revealed reduced sales forecasts in Europe after the European Union renegotiated its vaccine supply agreement with Pfizer and BioNTech. This information, combined with the company's disappointing outlook, had a significant effect on investor confidence, resulting in a greater than 20% decrease in Moderna's stock during a single trading session following its Q2 earnings report in August of last year. Since then, the stock has undergone a continuous decline, dropping from its 52-week high of roughly $150 in June of last year to its current value of $27. It is precisely this downside risk, when compared to the relative upside trade-offs we implemented – at a large scale – in building the Trefis High Quality (HQ) strategy, which has achieved over 91% return since its inception, and outperformed the S&P.
Separately, see – 35% Downside For DocuSign Stock?
The main reason for the downturn in Moderna's stock is a significant drop in the demand for its COVID-19 vaccine. After experiencing remarkable growth during the pandemic with its groundbreaking mRNA vaccine, the company is now transitioning to a seasonal vaccine market, which has drastically affected sales.
The financial implications are clear in Moderna's revenue statistics. Over the last twelve months, the company's revenue was $3.1 billion, marking a considerable 83% decrease from $18.9 billion in 2022 – a direct consequence of reduced demand for its COVID-19 vaccine. This downward trajectory is projected to persist, with sales anticipated to decline further to approximately $2.1 billion in 2025.
Recent developments have intensified investor apprehension. In January 2025, Moderna further cut its 2025 sales forecast by $1 billion. The company also delayed its break-even target by two years due to setbacks in the development timelines for several key products.
A pivotal aspect affecting Moderna's susceptibility is its narrow product portfolio. Until its RSV vaccine launched last year, the COVID-19 vaccine was its sole commercially available product. This heavy dependency on a singular product rendered the company extremely vulnerable to demand fluctuations, especially as the pandemic shifted into an endemic stage. While Moderna has demonstrated promising clinical trial outcomes for its skin cancer vaccine, wherein a combination of this vaccine and Merck's established Keytruda immunotherapy showed significant improvements in recurrence-free survival for patients with phase three or four melanoma, the rollout of this vaccine is still a few years away, pending regulatory approvals.
It's not solely sales that are being affected. Moderna's Operating Income over the past four quarters was $-3.7 billion, reflecting a very poor Operating Margin of -118.8%. Furthermore, Moderna's Operating Cash Flow (OCF) during the same period was $-3.1 billion, indicating a very low OCF Margin of -97.2%.
In summary, Moderna capitalized on the unprecedented demand during the pandemic, but is now grappling with the challenges of reverting to a normalized market. The company is actively striving to diversify its revenue sources; however, the swift decline in COVID-19 vaccine sales has outstripped its ability to quickly compensate for these losses, resulting in the significant fall in its stock price.
The situation with Moderna underscores the risks associated with heavy investments in a single stock. Creating a diversified portfolio is essential for balancing risk and reward. For instance, the Trefis High Quality (HQ) strategy, which aims to balance risk and reward, has outperformed the S&P 500, Nasdaq, and Russell 2000 since its inception.