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How A COVID-19 Vaccine Will Influence The Stock Market

  • November 11, 2020
  • Drew Ragosta

Amongst many other things, when all is said and done, 2020 will likely be remembered as the year defined by COVID-19. If all goes well, it will also be remembered as the year we cured COVID-19 in a remarkable amount of time.

This past week, Pfizer announced that late-stage testing for their COVID-19 vaccine showed promising results, bringing the world another inch closer to a cure. This would also set a record for an antidote being developed within a year of production for a pandemic that has not even turned one. While all sounds exciting, there is still the lingering uncertainty of the vaccine’s safety and widespread skepticism of it working correctly amongst the public.

Let’s face it, nobody wants to be a guinea pig.

Many public officials and the general public have expressed concerns about trying the vaccine during the initial rounds of nation-wide distribution. Notable public officials like President Donald Trump promised unconvincingly during presidential debates the availability of a vaccine before the end of the year. To find out weeks later that the president’s claim was not totally empty renders a promising sign not only for medical professionals but investors as well.

Biotech and pharmaceutical stocks have been gradually catching the eye of investors. Groundbreaking companies like CRISPR continually show positive test results and investors have watched its stock prices rise significantly over the last year. According to Grand View Research, CRISPR is expected to increase at a compound annual growth rate of 16.6%.

What’s going on with Pfizer?

Being one of the notable pharma giants, it is no surprise that Pfizer is a leading force in developing a COVID-19 vaccine. After announcing that their vaccine is 90% effective early this week, Pfizer’s stock price increased and CEO Albert Bourla sold 132,508 shares of his company’s stock at $41.94 per share, a total of 5.6 million. Cashing in on the increase of his company’s stock price not long after the gravity of this announcement was still settling spurred conversation about the legitimacy of the data and potential market manipulation.

According to CNN, a Pfizer spokeswoman told reporters that this curious transaction was merely “predetermined plans managed through a third-party stock administrator.” In a stark parallel, Moderna had announced promising news a few months prior that their COVID-19 vaccine had yielded positive results as well. Shortly after this announcement, Moderna’s CEO sold shares of his stock, giving the SEC a reason to conduct an investigation into potential illegal market manipulation.

How do these announcements affect the stock market?

We all saw what Pfizer CEO Albert Bourla did. The promise of a working vaccine excites investors and will unquestionably raise the stock price over time for pharma companies like Pfizer if good news continues to circulate.

This latest announcement from Pfizer alone has investors at the edge of their seats ready to pounce. As biotech and big pharma companies continue to reach new heights and surpass milestone after milestone, traders would be wise to consider investing ahead of time. However, if information is released that contradicts the legitimacy of the data Pfizer is reporting, stock prices could tank instantly and weaken investor confidence. After all, we know a cure is coming, but how long do we have to wait, and from which company?

This is where investing gets risky. Despite the big news coming from Pfizer and Moderna over the past few months, there is still a strong case for investor hesitation. With every big Pharma company competing to get the vaccine out first, there is still the lingering possibility of another quiet contender that could potentially dethrone Pfizer and Moderna as the favored companies to get the job done. Maybe a contender like CRISPR?

How long do vaccines usually take?

Back in April, Dr. Fauci announced that the probable time period for a vaccine to be developed and distributed would be around 18 months. Obviously, nobody expected to receive positive data like we did from Pfizer only eight months later, but developers aren’t nearly out of the woods yet. There is still not enough information to legitimize any reasoning for the public to get excited about a working vaccine. Not only do companies have to work with the FDA for approval, but they will also have to surpass public speculation and skepticism. Let’s not forget enough resources for production and mass distribution. The public will also have to see convincing and reliable research that proves the vaccine is not harmful.

And if COVID-19 has revealed anything at all, it has shown us that we still don’t know everything about it. This seemingly complex virus takes a new turn and serves a new spin too frequently for comfort. This same windy disposition draws many parallels to the way investors should view putting their money and confidence into big pharma until more convincing data is reported.

It is likely that we won’t see a vaccine for some time. Investors should sit tight and watch the news closely for updates before placing any trades. Despite the uncertain times we live in and the threats the virus poses, investors can rely on Front for critical stock information. Smart stock picks from Front help investors make money while mitigating risk. For more information, visit Front’s website or follow them on social media.

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