Moderna weighs on the stock market; Uber, rapid fall
Stocks remained somewhat in a sustaining pattern Thursday morning as investors tried to understand the potential future course of the stock market despite a host of offsetting factors pulling indices in different directions. The major benchmarks once again posted mixed performances, reflecting the efforts of market participants to look to the most promising stocks available. At 11:30 a.m. EDT, Dow Jones Industrial Average (DJINDICES: ^ DJI) was up 107 points to 34,337. S&P 500 (SNPINDEX: ^ GSPC) slightly higher by 3 points at 4170, but the Nasdaq Composite (NASDAQINDEX: ^ IXIC) fell 58 points to 13,523.
Moderna (NASDAQ: ARNM) has been one of the most watched stocks on the market over the past year, but even though the biotech stock has reported favorable earnings results, investors are concerned about the possible ramifications of ongoing efforts at the market level. federal government regarding its COVID-19 vaccine. Meanwhile, Uber Technologies (NYSE: UBER) and Quickly (NYSE: FSLY) both suffered declines after their respective earnings releases. Below we will go into the details.
Moderna looks healthy – for now
Moderna shares fell nearly 8% on Thursday morning. While the biotech first quarter financial report gave shareholders plenty of cause for celebration, concerns about how much money Moderna will be able to raise in the future weighed on investor confidence.
Moderna’s figures reflect the success of its vaccine. Revenue climbed to $ 1.94 billion in the first quarter, from just $ 8 million the year before. Moderna posted net income of $ 1.22 billion, which translates to $ 2.84 in earnings per share, its first quarterly profit in history.
Yet Moderna also had positive things to say about her future. A booster dose study in previously vaccinated clinical trial participants showed promising signs in the fight against COVID-19 variants, while a study for the vaccine in patients 12 to 17 years old showed strong 96% efficiency without any serious safety concerns. Moderna has increased its production projections to between 800 million and 1 billion doses in 2021, with hopes of increasing to 3 billion doses by 2022.
The federal government could have an impact on future revenues, however, with its support for international patent protection exemptions. The move, which responds to calls from India and South Africa to allow production of generic vaccines, marks a big departure from past bipartisan support for intellectual property protection. Opponents stress that the waivers by themselves would not lead to immediate production of generics and introduce concerns about quality control.
It’s unclear whether patent protection will be removed or whether the threat will be enough to get Moderna and other vaccine producers to allow production globally at lower costs than they might otherwise. The uncertainty, however, is hitting shareholders hard and could dampen Moderna’s growth until it is resolved.
Profits hit high-growth stocks
Meanwhile, other high growth stocks were hit hard. Uber fell 9% Thursday morning, while Fastly plunged 25%.
Uber’s collapse came despite gross bookings hitting an all-time high, up 24% from levels a year ago. The company’s mobility division, which includes its rideshare service, saw a huge 41% drop in revenue year-over-year, even after adjusting for a one-time accounting item. However, the delivery business saw its turnover more than triple over the same period. There were signs of recovery, with travel down just 13% and the Asia-Pacific region showing a strong rebound. However, lingering concerns over labor law issues appeared to dampen enthusiasm for the stock.
Meanwhile, Fastly’s plunge was the result of several factors. Quarterly results showed revenue growth of 35% and an increase in gross margin numbers, but adjusted losses widened from levels a year ago. Despite its 139% dollar-based net expansion rate, however, some concerns about slowing growth rates came into play. The departure of CFO Adriel Lares also raised some nervousness, but the greatest concern was is that Fastly could see growth slow down for the rest of the year and beyond.
Investors were delighted to see that stocks grew favorably over the past year, without questioning whether the magnitude of the stock price gains was justified by corporate growth rates. Now that stock prices sometimes fall even with strong fundamentals for companies, it is clear that investors consider that the bull market recovery has come too far, too quickly. It could cause short-term restlessness for a while.
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