Novavax (NASDAQ: NVAX) stock price has dropped in the past five straight days as concerns about the company’s outlook darkened. The shares were trading at $7.65, which was about 32% below this month’s high of $11.31. At its peak, NVAX shares were trading at $330.
Novavax faces two key risks
Novavax was one of the top beneficiaries of the Covid-19 pandemic. The company’s revenue jumped from over $18.7 million in 2019 to more than $475 million in 2020. Its revenue blasted to over $1.9 billion in 2022.
Its losses also jumped. The company’s net loss jumped from $132 million in 2019 to over $1.73 billion in 2022. This increase happened as the company boosted its investments in its Covid vaccine rollout.
The most recent results showed that the company’s revenue dropped by 88% to $81 million in the first quarter as demand. Its net loss jumped to more than $294 million compared to over $203 million in the same quarter in 2022.
Novavax hopes that its total revenue will be between $1.4 billion and $1.6 billion. It also hopes that its cash flow in the second and third quarters will be about $500 million.
The biggest risk for Novavax is that it has billions in orders from several governments. Governments have over $2.1 billion in advance purchases from governments. With the Covid-19 pandemic having ended, and with demand for vaccines falling, there is a likelihood that many of these governments will not honor their commitments. In a statement to FT, the company’s CEO said:
“And then to all of a sudden say: ‘Well you spent all your money, you committed to protect our citizens. Now we don’t think we need it as much. Sorry, you’re out of luck.’ That’s probably not good for long-term relationships and that type of thing and to benefit public health,
The other risk for the company is that it does not have a strong pipeline of vaccines. This is in contrast to a company like Moderna which has several vaccines in development.
Novavax stock price forecast
The weekly chart shows that the NVAX share price has been in a freefall for a long time and is now sitting at the lowest level since 2020. The Average True Range (ATR) has crashed to a low of 2.84, the lowest point since May 2020. This is one of the most popular volatility indicators.
Novavax shares have moved below all moving averages. Therefore, the stock could continue falling as sellers attempt to move below the key support at $2. This view can only change if the cash-strapped company confirms its deals with governments.
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