Why Is Modern Stock Dropping? Q2 Earnings Anxiety Might Be the Root Cause
Key takeaways
- Moderna’s Q2 report revealed $344 million in revenue, sharply down from last year but still beating estimates
- The pharmaceutical is pinning its hopes — and sales — on a new Covid vaccine launching this fall
- Moderna shares rose 5.5% in premarket trading at the news
Moderna’s share price hasn’t exactly been on an upward trend this year as the company was deemed to be a one-trick pony with the Covid vaccine — and Wall Street expected the worst with the second quarter earnings report. Yet they were pleasantly surprised, and the stock saw a small gain as a result. Here’s what you need to know.
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What were Moderna’s Q2 earnings?
While the losses per share weren’t as bad as expected — they were $3.62 a share for the second quarter compared to an expected $4.04 — revenue was sharply down. Modern reported $344 million in revenue, which doesn’t look bad compared to the $319.6 million analysts had predicted, but it’s a far cry from last year’s $4.75 billion.
Covid vaccine sales were down 94%, and the total net loss was $1.38 billion, versus the $2.2 billion net income it recorded at the same time last year.
However, the pharmaceutical is set to roll out a new Covid vaccine targeting the omicron subvariant XBB.1.5, which it believes will save flagging demand. Moderna raised its full-year guidance for sales to $6–8 billion, up from the $5 billion forecasted.
How did the market react?
In the run-up to the earnings beat, Modern stock had continued to fall as investors hedged their bets on Moderna’s financial not being in great shape. But narrower losses than expected caused Moderna stock to jump 5.5% in pre-market trading on Thursday.
Despite the lift, it’s clear Moderna’s share price is in the doldrums this year. To date, it’s lost 38.6% of its value over concerns about the vaccine demand. Other healthcare stocks haven’t fared much better: Pfizer’s 2023 share performance is also down 31%, while AstraZeneca has stayed flat.
The bottom line
Moderna’s only marketable product is the Covid vaccine, which we’re all assuming the worst has now passed, so it’s risky for the company to up its guidance for sales amid much weaker demand. But investors liked that the losses were narrower than expected, which is why the stock got a slight boost after days of declines.
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