Moderna Dropped by 20% This Week -- Is It a Smart Buy Right Now?

Although the stock market was having a generally strong week, that isn't the case for vaccine technology company Moderna (NASDAQ: MRNA). The company, which was a leader in developing one of the initial COVID-19 vaccines, has plunged by 20% for the week as of mid-day Thursday.

Disappointing sales guidance is the key reason for the plunge

The main reason for this week's decline is that Moderna lowered its 2025 full-year revenue guidance, and by a wide margin. The prior forecast called for $2.5 billion to $3.5 billion in sales for 2025, but the updated guidance calls for $1.5 billion to $2.5 billion. At the midpoint, that represents a $1 billion reduction, or 50% lower revenue.

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Moderna had previously said that it will be break even on operating cash flow by 2028, which had already been pushed back. Now investors aren't so sure.

Not only is COVID-19 vaccine demand weaker than expected, but its market share has declined. The company had 48% of COVID vaccine demand in 2023, compared with just 40% this year. Not only that, but Novavax's vaccine product is set to hit the market soon, which could further erode Moderna's share.

There are some good reasons to have a positive outlook

It isn't all bad news when it comes to Moderna. For one thing, the company still has $6.9 billion in cash and short-term investments on its balance sheet (the entire market cap is just $13 billion) and is taking steps to reduce costs for the time being.

In addition, the company has 10 new products in its pipeline that it hopes will receive FDA approval within the next three years (including a trio that could be approved in 2025 alone). One example is the combination flu and COVID shot it has been developing. In a nutshell, Moderna has plenty of runway, and if the company can get its promising candidates to market, it could still have a bright future. But it is important to know that it is a big if.

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Matt Frankel has no position in any of the stocks mentioned. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.