Moderna: Have The Shares Finally Hit Bottom?
MRNA showing signs of capitulation
Q: What is another way of describing a stock that is down by 90%?
A: It is a stock that went down 80% and then lost half its value.
Five years ago, few of us had heard of Moderna or knew anything about RNA technology. That all changed, of course. By the middle of 2021, millions of people around the world were eagerly waiting to get a dose or three of Moderna’s vaccine against COVID-19.
And it was reflected on the stock chart. Over on the left-hand side it looks like almost a flat line until March 2020. Then the run from $25 to $500 ended with a classic parabolic climax.
And that was the peak in the frenzy for MRNA shares. The way down was also classical in many ways, including the numerous bear market rallies of 20%, 50%, or even 100%. Even on ugly charts such as this one, there are often short and powerful advances even as the long-term trend is down.
Another thing you see is people speculating about where the bottom in the shares might be. Is this the bottom? Or this? Or this?
And now, failing to learn from those who came before us, we at See Through Charts wonder if the bottom might finally, truly, have arrived.
What has our attention is those last three bars on the chart above, and the accompanying volume. It hardly looks like anything on that chart, so let’s zoom in with a daily chart of the last nine months.
You see one of those powerful bear market rallies on the left, followed by a relentless downward spiral. And you may notice also the unusually heavy trading volume lately. Not just on one particular day but ongoing over the last three weeks. This is the type of behavior you see at tops and bottoms. (hint: this is not a top)
Should you buy shares of MNRA now? Only time will tell if this is really “the” bottom for MRNA. As a short-term swing trade, the conditions look good for a quick rebound. A quick pop up to $50 would be a nice percentage gain in a time period measured in days.
If you are thinking more long-term, it is more complicated. First, keep in mind the Q&A that started this newsletter. The stock could get cut in half again here and it would be just a few red pixels on the long-term chart. You might take a small position in the stock now or simply put MRNA on your watch list and wait for more evidence that a meaningful bottom has actually arrived.
Further reading
The situation with MRNA is not a “falling knife”. However, this bit of advice from TheStreet.com is useful.
Bogleheads has some interesting tables and charts regarding percentage gains and losses and how to get back to breakeven.
A summary from Reuters of Moderna’s forecasts for the coming years.