Biotech’s biggest short bet, vaccine developer Moderna Inc., is poised to break another intraday record for a fourth straight session, leading one Wall Street strategist to compare trading to bitcoin’s wild swings.
Moderna jumped as much as 17 per cent in Tuesday’s premarket trading. The stock has surged 55 per cent and added more than US$21.4 billion in market value over the past three trading days, after the company revealed positive data and filing plans for its experimental inoculation.
“Vaccine stocks trading more like bitcoin than biotech,” Jared Holz, a Jefferies healthcare equity strategist wrote in a note to clients. The “unprecedented” moves are likely driven by retail investors and potentially quant models rather than institutional investors, he said as the stock blew past the 12-month price target of all but one analyst.
Moderna’s US$3.55 billion of notional short interest with 23 million shares shorted, may lead some to blame part of the gains on short covering, where bearish bettors buy back borrowed stock to close their positions. Holz says that short interest levels are “not nearly high enough to be generating this type of trading action” after Moderna’s stock added at least 10 per cent a day over the past few trading sessions and more then doubled in November.
Ihor Dusaniwsky, S3’s managing director of predictive analytics, agreed that short covering wasn’t driving the move with trading volume far exceeding short-side activity. Over the past 30 days, 4.33 million shares worth $302 million were covered, he said. Short-sellers are down US$3.09 billion this year in net-of-financing mark-to-market losses with US$2.03 billion of that coming in November, he said.
Earlier Tuesday, European regulators said they would finish assessing Moderna’s shot for a conditional authorization by Jan. 12 while Pfizer Inc. and partner BioNTech SE should get a decision on their shot by Dec. 29.
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