Novavax (NASDAQ:NVAX) stock rose 8% on Oct. 3 after the Food and Drug Administration (FDA) approved its updated Covid-19 vaccine.
But short sellers now hold 54% of the float.
Novavax opened this morning at $7.74 per share, a market capitalization of $770 million. It was below $7 when the FDA news came out. NVAX stock dropped about 5% immediately after trading began.
Return of a Vaccine Star
Novavax was a hot stock in 2020 as it competed to create a Covid vaccine. The stock traded as high as $289 per share in early 2021.
But Novavax’s traditional vaccine process, which included an adjuvant to improve its dosage yield, came up short next to Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE), which worked with BionTech (NASDAQ:BNTX) of Germany. Their use of mRNA was the subject of the latest Nobel Prize in Medicine. Novavax eventually moved toward getting approvals and contracts outside the U.S.
While Novavax generated $424 million in sales during the second quarter of 2023 and $58 million, 58 cents fully diluted, in profit, it’s a pittance next to the tens of billions the mRNA makers earned at their height. Novavax expects revenue of $1.3-1.5 billion for fiscal 2024.
It’s hoped the FDA approval and Novavax’s traditional vaccine approach could bring sales in a political environment where anti-vaccine rhetoric is rampant, especially concerning mRNA.
While the bears have been winners in the Novavax stock market, the stock is now selling at half its annual sales, and the company is profitable. It also has almost three times more cash than debt. By contrast, while Moderna has been battered this year, it’s still worth twice its sales.
Shorts are betting that Novavax doesn’t hit its revenue estimates, which include product sales of over $1 billion.
NVAX Stock: What Happens Next?
Fintel’s short squeeze score for NVAX is quite high right now, sitting at 85.77 out of 100. And with a shortage of shares available to short, currently zero at Fintel’s prime brokerage data source, Novavax looks like a good candidate for a short squeeze.
As of this writing, Dana Blankenhorn held a LONG position in MRNA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
