Here's Why I Wouldn't Touch Moderna With a 10‑Foot Pole Until Its Next Growth Engine Is Clear

Moderna (MRNA +0.38%) became a household name during the coronavirus pandemic. There’s a good reason for that: Its mRNA technology enabled the rapid development of a vaccine. The financial benefit of that success for Moderna was huge, but what comes next?

Moderna hits a home run

The onset of the COVID-19 pandemic was a global event and a material shock to the world’s healthcare system. Moderna used its mRNA technology to help develop a vaccine in record time. The company’s reward was a massive revenue spike, with its sales jumping from roughly $60 million in 2020 to over $19 billion in 2023.

Image source: Getty Images.

For a biotech developing novel medicines, this revenue advance was highly beneficial. It pushed Moderna’s cash hoard up from $1.1 billion to over $10 billion. That’s money that the company has been able to invest in the development of new products.

There’s just one problem. COVID-related revenue has been declining, with sales now down to $1.9 billion. And management is burning through its savings, which are now down to roughly $5.8 billion. To be fair, that’s still a lot of money, but so far there’s little to show for the billions that have been spent. So there’s no reason to expect a material turnaround in the biotech’s financial performance.

There are sparks, but no fire

Moderna hasn’t been throwing money away. It has an influenza vaccine now being examined by the Food and Drug Administration. After originally refusing to look at the vaccine, which was a major setback for the company, the FDA has changed course and is now considering it with enough lead time that the vaccine could be approved before the next flu season.

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NASDAQ: MRNA

Moderna

Today’s Change

(0.38%) $0.19

Current Price

$50.06

Key Data Points

Market Cap

$19B

Day’s Range

$48.73 - $50.31

52wk Range

$22.28 - $55.20

Volume

9.5K

Avg Vol

12M

Gross Margin

44.29%

Moderna is also working with pharmaceutical giant Merck on a melanoma therapy. Results of trials look exciting, but the therapy is still in the testing phase. The concept of what amounts to individualized cancer care is a huge opportunity, but it could be some time before it hits the market.

What’s next for Moderna?

The reason to be cautious about Moderna is that, following its major success with COVID, it has yet to launch a major new product. Until it does, its spending will remain elevated, and its revenue isn’t likely to grow materially. Conservative investors should probably wait until the company actually gets a new product over the finish line before buying the stock.