Moderna Stock Could Have a Lot Further to Fall After Disasterous Earnings

Things appear to have gone from bad to worse for high-flying pharmaceutical company Moderna (NASDAQ:MRNA) stock, leaving shareholders reeling.

The Moderna (MRNA) logo surrounded by syringes, pills and disposable face masks.
Source: Ascannio /

MRNA stock has cratered, dropping from $350 a share all the way down to $228. The steep fall came after the company reported disappointing quarterly results that shocked Wall Street and revised down its forward guidance related to both future sales and production of its Covid-19 vaccine.

The decline in the share price worsened when, a day after its earnings, rival pharmaceutical company Pfizer (NYSE:PFE) announced a major breakthrough in a Covid-19 pill that it is developing.

The swift reversal of fortune has thrown the stock and its shareholders into turmoil and led to questions about where Moderna goes from here.

Shocking Results

Things had been looking up for Moderna only a few weeks ago after a U.S. Food and Drug Administration (FDA) advisory committee unanimously recommended giving booster shots of Moderna’s Covid-19 vaccine to elderly and vulnerable Americans, as well as to children ages 5 to 11.

The FDA clearances paved the way for hundreds of millions of dollars in additional revenue for Moderna, whose Covid-19 vaccine is the first pharmaceutical product the company has successfully commercialized. However, no sooner did the FDA rulings help to lift MRNA stock. Then the company delivered a shockingly bad quarterly earnings report.

Moderna’s revenue in this year’s third quarter exploded more than 30-fold to $5 billion, driven by robust sales of its Covid-19 vaccine. The company’s net income also soared to $3.3 billion, or $7.70 per share.

That compares to a net loss of $233 million, or $0.59 per share, in the third quarter of 2020. While the earnings showed substantial growth for Moderna, they, unfortunately, fell short of Wall Street’s high expectations.

The consensus estimate of analysts was for Moderna’s Q3 EPS to come in at $6.2 billion, or $9.05. The miss sent MRNA stock down 18% at the opening bell the morning after its earnings were announced.

Perhaps worse, Moderna downgraded future sales of its Covid-19 vaccine, saying it now expects to supply between 700 million and 800 million doses of its vaccine for all of this year, lower than a previous estimate of between 800 million and 1 billion doses.

Wall Street was not impressed and MRNA stock sold off heavily as a result. It was a stark change for Moderna shareholders who have enjoyed a gain of 210% over the last 12 months.

Even with the current slide, MRNA stock is still up 115% year-to-date as the company, until now, seemed to meet the stratospheric expectations for its Covid-19 vaccine and its global rollout.

Pfizer Pill

No sooner had Moderna dropped its third-quarter stinker than rival pharmaceutical company Pfizer announced that its Covid-19 pill has been found to cut the risk of hospitalizations or deaths by 89% in high-risk adults who’ve been exposed to the virus.

Pfizer’s antiviral pill is now the second one in late-stage development behind a similar oral medication created by Merck & Co. (NYSE:MRK).

Scientists and healthcare professionals see a Covid-19 pill as being a potential gamechanger in ending the pandemic, particularly in impoverished nations. Pfizer said in a news release that it plans to submit data on its Covid-19 pill to the FDA “as soon as possible.”

Suddenly Moderna, which had always seemed at the head of the pack among developers of Covid-19 medications, appears to be playing catch-up to its rivals. The antiviral pill developed by Merck has already received regulatory approval in the United Kingdom.

Britain’s Medicines and Healthcare Products Regulatory Agency said that Merck’s pill will greatly help in the treatment of Covid-19, a disease that has now killed more than five million people globally. News of the Pfizer pill came as a gut punch to Moderna’s shareholders who have had to watch the company’s share price fall further and faster in recent days.

Wait for MRNA Stock to Bottom

With Moderna’s stock in freefall at the moment, investors who do not already own shares would be smart to wait on the sidelines for the time being.

Watch for a bottom before buying any shares. Investors who already have a position in Moderna should also watch for the stock to hit rock bottom and then plan to average down if needed.

Going forward, it will likely take several positive quarterly financial results for Moderna’s share price to properly turn around. In the meantime, analysts will be watching for any further signs of weakness from the company. But with its outlook suddenly looking grim, now is not the time to buy MRNA stock.

Disclosure: On the date of publication, Joel Baglole held a long position in MRNA. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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