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Moderna (MRNA) Down 30% After Posting All-Time High

Moderna, Inc. (MRNA) is having a tough week, with the vaccine approval by the Food and Drug Administration (FDA) triggering a sell-the-news reaction that has dropped the stock to a December low. It is down another six points in Wednesday’s pre-market, bringing the three-day total to 21 points, or about 15%. However, distribution actually started at the end of November, well before rival Pfizer Inc. (PFE) received emergency use authorization for its vaccine.

Key Takeaways

  • It will be months before demand for Moderna’s vaccine can be accurately gauged.
  • The stock has sold off 15% this week and more than 30% since the Dec. 1 all-time high.
  • The decline looks like technical selling pressure rather than worries about a new COVID strain.
  • Weekly sell cycles predict additional weakness into January.

The new COVID strain has contributed to selling pressure, but this looks like a technical exercise in which a story stock is bid up to unsustainable levels where insiders take profits and hand the “bag” to unsuspecting retail investors. Those folks are now legitimate bag-holders, suffering through the first test at the 50-day exponential moving average (EMA) since Nov. 4. That’s the level to watch in coming sessions because it has come into narrow alignment with the Nov. 27 unfilled gap between $109 and $115.

What’s ahead for Moderna? For starters, the aggressive distribution signals an intermediate correction that should last well into the first quarter. To be honest, no one is sure how many vials and variations of the vaccine will be needed to snuff out the virus, especially with competing drugs coming online. At some point, attention will turn to Moderna’s excellent long-term prospects, given its ground-breaking work on mRNA compounds.

Wall Street consensus on Moderna stock has deteriorated in recent months due to historic share price appreciation, with a “Moderate Buy” rating based upon seven “Buy” and seven “Hold” recommendations. In addition, two analysts now recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $69 to a Street-high $200, while the stock is set to open Wednesday’s session nearly $30 below the median $148 target.

A story stock refers to a company’s shares whose value reflects expected outperformance, the culmination of some new innovation, or favorable press coverage, rather than its market value being solely based on fundamentals like assets and income. A story stock’s share price is thus often bid up on overly optimistic expectations about its potential profits.

Moderna Daily Chart (2018 – 2020)


The company came public at $22 in December 2018 and topped out at $29.79 in April 2019. Sellers then took control, dropping the stock through the IPO opening print and into August 2019’s all-time low at $11.90. The subsequent bounce made limited progress until February 2020, when it surged into an uptrend that generated intense volatility into April. Price finally ejected to higher ground in the second half of the month, carving two rally waves into the July peak at $95.91.

The stock fell more than 40% before finding support in the mid-$50s in September. Aggressive buyers returned in November, igniting a 112-point, four-week advance into Dec. 1’s all-time high at $178.50. Moderna has now dropped more than 30% off that peak, trapping late-to-the-party shareholders hoping to profit from the FDA approval. Fortunately, there’s plenty of support between the low $90s and $115, predicting that the selloff will find a trading floor in coming sessions.

The weekly stochastic oscillator has crossed into a sell cycle that predicts at least another four to six weeks of relative weakness. In turn, the timing suggests that the stock will trade at lower levels for weeks or longer before a strong buying impulse can challenge the fourth quarter high. In addition, lower prices into year end will generate a bearish dark cloud cover candlestick on the monthly chart, raising the odds for a long-term top.

A stochastic oscillator is a momentum indicator comparing a particular closing price of a security to a range of its prices over a certain period of time. The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result. 

The Bottom Line

Moderna stock has entered an intermediate correction after posting an all-time high at the start of December.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.

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