Clinical-stage biopharmaceutical company CureVac (NASDAQ:CVAC) wasn’t discussed much among market participants prior to August. Today, however, there is plenty of buzz surrounding CureVac stock. When we examine the stock’s price action, you’ll see why it’s such a big deal.
It is definitely worth mentioning that biopharmaceutical stocks are usually volatile and have a high beta value. This can be exacerbated when the company is a recent initial public offering, or IPO. So, it is not advisable to take a large stake in CureVac stock even if you decide that you like the company.
Plus, there are other factors, soon to be discussed, which are likely to add to CureVac stock’s potential volatility. You may find that this stock is too news dependent, for instance, to invest in safely. Or, you might decide that the price movement is just too wild to handle.
A Closer Look at CureVac Stock
Let’s start by examining the price of CureVac stock.
The IPO for CureVac stock occurred on Aug. 14 of this year. The company chose to price the shares at $16, at the upper end of the proposed range. In the process, CureVac sold 13.3 million shares, thereby generating $213.3 million.
The majority of retail investors, however, didn’t get to own CureVac stock at $16. Indeed, the shares began trading at the much higher price of $44. Unfortunately, this is not unusual as retail traders often have to trade post-IPO shares at inflated prices after insiders already got in at a more favorable price point.
In any case, the stock blasted off during its first days of trading on the Nasdaq Exchange. By Aug. 19 CureVac stock closed at nearly $57, and the next morning it traded at $63.
The stock’s 52-week high, if you can believe it, is exactly $85. That is pretty astonishing, and it might be a cause for concern.
Small Fish in a Growing Pond
What really adds to the speculative nature of CureVac stock is that it is yet another entrant into the field of proposed novel coronavirus vaccines. You’ve already got massive, capital-rich companies like Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) competing in this increasingly crowded field.
To be frank, it would be hasty to get overexcited about CureVac stock today. Pfizer and Moderna are much bigger competitors than CureVac. The sharp spike in CureVac shares is, to a large extent, a function of IPO mania combined with retail traders’ quest to find the next Moderna.
In fact, CureVac isn’t even the only company developing a Covid-19 vaccine based on messenger RNA, or mRNA. Pfizer and Moderna are already involved in this niche field.
The Big Purchase
CureVac bulls will argue that there is a difference here, however. In particular, there is a catalyst in the form of the European Commission concluding “exploratory talks outlining an Advanced Purchase Agreement (APA)” for “up to 225 million doses and an option for an additional purchase of 180 million doses” of CureVac’s vaccine candidate.
The announcement of this catalyst certainly gave a boost to the CureVac share price. But let’s not ignore the stipulation that the doses are “to be supplied once our mRNA-based vaccine has proven to be safe and effective against COVID-19.”
Really, the word “once” should be replaced with “if” since investors shouldn’t get into the habit of making assumptions. Besides, one of CureVac’s competitors might have a vaccine proven safe and effective first.
That would undoubtedly throw a wet blanket on the CureVac bull party. It sure seems as if CureVac’s victory has already been priced into the stock. And after traders “buy the rumor,” the next phase could be “sell the news.”
The Bottom Line
It’s best to tap on the brakes and just watch CureVac stock instead of buying it right now. Otherwise, you could end up betting on assumptions that don’t pan out, with dire consequences.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.