Why Moderna Stock crashed today

What happened

Actions of Modern (NASDAQ: MRNA) plunged 15.6% on Wednesday after the European drug regulator provided an update on the safety of the COVID-19 vaccine.

So what

The European Medicines Agency (EMA) is investigating three new conditions reported by a small number of people who have received COVID-19 mRNA vaccines provided by Moderna and Pfizer.

These conditions include:

• Erythema multiforme, an allergic skin reaction.
• Glomerulonephritis, or inflammation of the kidneys.
• Nephrotic syndrome, a kidney disorder.

The EMA is evaluating whether these conditions could be possible side effects of the vaccines.

Image source: Getty Images.

The information has been provided as part of the ongoing security updates that the EMA provides to the public on a regular basis. The EMA has not recommended any changes to the product information displayed on the labels of these vaccines.

Now what

Analysts had previously voiced concerns that Moderna’s stock price had risen too far, too fast. Bank of America Analyst Geoff Meacham said Tuesday that Moderna’s nearly $ 200 billion market valuation was “ridiculous” and “unjustifiable on a fundamental basis.” Meacham argued that to be worth that much, Moderna is expected to deliver between 1 billion and 1.5 billion doses of its coronavirus vaccine each year through 2038. In addition, Moderna’s entire experimental drug pipeline is expected to be successful. and generate total maximum sales of $ 30 billion.

Meacham believes both of these assumptions are highly improbable, so he repeated his underperformance rating on Moderna’s stock and his $ 115 price forecast for his stock. Even after today’s plunge, Meacham’s price target is still 70% below the current stock price, near $ 385.

Today’s news and Meacham’s warning appear to have prompted many investors to take profits and sell their shares in Moderna.