Today, shares of Novavax (NASDAQ:NVAX) are on the move. NVAX stock is down more than 15% as investors price in increasing risk related to vaccine production today.
Indeed, it appears that Novavax-specific production problems are at the heart of today’s drop. Let’s dive more into what is going on with this vaccine producer, and why investors have suddenly gotten so bearish on this Covid-19 story.
Vaccine Production Delays a Problem for NVAX Stock Today
Today’s exclusive with Reuters outlined what appears to be a pretty bleak picture for investors in NVAX stock.
The report indicated that Novavax was delaying signing a hotly anticipated supply contract with the European Union. This comes amid concerns from Novavax that it wouldn’t be able to meet the quotas set out in the deal. Supply shortages related to difficulties procuring raw materials were the main reason cited for these delays.
The deal announced earlier this year would have supplied 100 million doses of Novavax’s vaccine to the E.U. This deal also carried an option for 100 million more doses.
Unsurprisingly, this announcement caused a sharp spike in NVAX stock to 52-week highs more than $330 per share. Today, the company’s share price is approaching a 50% drop from these levels.
A confidential source indicated that the process for finishing the contract was “slowing down,” leaving open the possibility the deal could go through. That said, it appears investors remain very skeptical of NVAX stock today and are in selling mode.
At the heart of the concerns is the fact a delay could result in Novavax losing market share to other large vaccine producers.
Timing Not Good for This Announcement
Hopes were that Novavax’s vaccine could help assuage concerns around vaccine-related troubles the E.U. has been facing of late. A temporary ban on exports of critical materials needed for the production of vaccines from the U.S. has hurt European supply thus far.
Similar restrictions placed on the export of E.U.-manufactured vaccines globally has created a situation where local supply is more important than ever.
Thus, Novavax’s presence in Europe was seen as a source of competitive strength in this environment.
Today, investors don’t seem so sure.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.