Moderna millionaires and the double-edged sword of stock market riches
Moderna’s top executives and early investors have grown insanely wealthy, even after last week’s hammering, which illustrated how transient stock market wealth can sometimes be. Co-founder Robert Langer owns a stake worth nearly $ 2.8 billion, while CEO StÃ©phane Bancel controls $ 5.3 billion in shares, as well as options valued at $ 1.2 billion at the end of last year.
But the new wealth doesn’t stop there. A significant portion of Moderna’s 2,400 employees hold shares as part of its share purchase plan. The company has also issued stock options and awards to employees and others who have a combined paper profit of $ 8 billion.
“The number of millionaires [at Moderna], at least on paper, has to be through the roof, âsaid Tony Mullin, a biotech human resources manager with knowledge of compensation levels across the industry.
Mullin witnessed the wealth effect of stocks when his former company, Watertown’s Pandion Therapeutics, was acquired by Merck & Co. in April for $ 1.85 billion. âA lot of people got rich instantly,â he said.
This windfall is happening at tech and biotech companies across the local landscape: Vertex, HubSpot, Ginkgo Bioworks, Toast, Wayfair, and DraftKings, to name a few of the big winners. Companies and their employees, many between 30 and 40 years old, are bursting with money. Their spending is filtering through the economy, increasing everything from house prices to sales of luxury cars, watches and wine.
To cite a striking example: European Watch Company sales have grown 25% per year over the past few years, according to Joshua Ganjei, general manager of the Newbury Street store, where the most expensive watches can easily exceed $ 100,000. âDemand is in uncharted territory,â he said.
The benefits of this gold rush, however, were not evenly distributed. They never are. More information on this extremely important warning in a moment.
Massachusetts has long been one of the wealthiest states in terms of income, as well as a broader measure of wealth, called net worth, which includes stocks and bonds, real estate, pensions, and private companies. The government does not break down net worth at the state level, but the country as a whole has grown richer over the past decade thanks to the rise in stock prices and home values.
U.S. household net worth reached $ 134 trillion in June, up 22% from the last three months of 2019, according to the most recent data from the Federal Reserve. This stretch includes last year’s brief recession and bear market caused by the pandemic, as well as several rounds of federal relief payments.
Stocks, as tracked by the Standard & Poor’s 500 Index, have risen 34% in the past year, and single-family home prices, both in Massachusetts and nationally, have risen by around 15%, according to Zillow data.
People tend to spend more when the financial markets are doing well; they feel richer, even if they haven’t cashed in yet.
âThe stock market has always been a barometer of confidence,â said Ernie Boch Jr., whose car dealership Boch Exotics sells high-end nameplates such as Ferrari, Maserati and Porsche. After accumulating money during the pandemic, many consumers have more discretionary incomes and feel ready to spend, he said. Even with a peak in auto prices due to supply disruptions, the richest buy very expensive cars.
“Bentley is going to have the best year ever”, said Boch. âRolls Royce too. McLaren is crazy. Benchmark: McLarens starts at around $ 200,000 and travels up to $ 2 million.
Money is also pouring into high-end real estate. In downtown Boston’s condominium market, sales of units costing $ 3 million or more set a record for the year through October 29, according to LINK data provided by Douglas Elliman Real Estate. In the past two months, three penthouse units at the Mandarin Oriental on Commonwealth Avenue have been sold in two separate transactions for a combined $ 48.8 million.
But it’s not just the toney condos in Back Bay or the Seaport that are being salvaged, said Kevin Ahearn, general manager of Douglas Elliman’s Boston division. For the first time in a 40-year career, the state’s three major housing markets – Boston, the suburbs inside I-495, and second homes in Cape Town – are buzzing at the same time, a he declared. Recent figures show that the Greater Boston housing market is cooling slightly, but this mainly means that prices are not rising at the scorching pace of a year ago.
âIt was an amazing race,â said Ahearn.
One business feeling the impact of a strong economy is the Urban Grape, a wine store in Boston’s South End. Co-owner Hadley Douglas commends her corporate clients for their commitment to the community, including black-owned and women-owned businesses like hers.
âThere’s a lot of business building going on here,â said Douglas, who opened the store with her husband, TJ, who is black. And spending by business customers, primarily on wine tasting events and gifts, has been a key source of growth.
âIt really makes a difference for small businesses in a huge way,â said Hadley Douglas. “It allows us to hire people, to give people raises.”
Now to the caveat I teased earlier: Even with all the lavish spending we see, the gains of a roaring stock market mostly stay with the rich. No surprise, I know. But it is often overlooked when we marvel at the latest market record.
The richest 1% of Americans owned 54% of shares of companies and mutual funds as of June 30, according to the Fed. The share of the top 10% is 89%.
Profits from the stock markets are widening the gap between the rich and the rest of us, with the richest 10% controlling 70% of the country’s total wealth, up from 61% at the start of 1990.
The thriving technology and life sciences sectors are making Massachusetts and the national economies more vibrant. The pie is growing, and that’s the good news.
But for half the country – the bottom 50% in net worth – its share of the pie is shrinking.
It’s a trend that can only end badly.
Anissa Gardizy of The Globe staff contributed to this story.