We came across a bullish thesis on Moderna, Inc. (MRNA) on wallstreetbets Subreddit Page by YouAlwaysHaveAChoice. In this article, we will summarize the bulls’ thesis on MRNA. Moderna, Inc. (MRNA)’s share was trading at $33.28 as of Feb 25th. MRNA’s trailing P/E was 7.06 according to Yahoo Finance.
A closeup of a vial of the biotechnology company’s vaccines.
Moderna (MRNA) has once again become a high-conviction trade, with a series of catalysts suggesting significant upside potential. The stock saw a 5% surge on Friday following reports from China that scientists discovered a Covid-like virus in bats. This virus shares the same entry pathway into human cells as SARS-CoV-2, making it a rare coronavirus with the potential to infect humans. With this information still underreported as of Friday, a broader awareness over the weekend is expected to drive strong buying pressure early next week. Additionally, avian flu concerns are intensifying. The virus has now become endemic in cows and cats, indicating its ability to spread among mammals. While human-to-human transmission has not yet been confirmed, the risk is growing, particularly with reduced transparency from U.S. health agencies. The government has cut funding for infectious disease research, and data that was readily available in 2020 is now scarce. If human-to-human transmission emerges, Moderna’s stock could see an explosive move higher, potentially doubling in value, making longer-dated call options an attractive bet.
Institutional investors are positioning aggressively. Bridgewater Associates, the world’s largest hedge fund, recently acquired over 600,000 shares of MRNA. Theleme Partners now holds $300 million worth, while Jane Street has increased its stake to $150 million. Despite a recent earnings miss on EPS, Moderna beat on revenue, and the stock momentarily dipped to $28 before quickly recovering to $33, signaling strong support. Book value sits around $30, which appears to be the stock’s floor. While there’s a possibility of another test at this level, the recent developments suggest it may hold firm. If MRNA breaks and closes below $30 on high volume, it could invalidate the bullish thesis, but for now, the setup remains compelling.
From a technical perspective, the chart signals a bullish reversal. There’s a significant bullish RSI divergence on both the daily and weekly timeframes, coupled with MACD turning up. This is the same technical pattern that indicated Walmart’s (WMT) pivot last week, further strengthening the case for upside. The options market is also signaling strong bullish sentiment. The put/call volume ratio for the upcoming week stands at 0.10, meaning ten times as many calls as puts were traded. The open interest put/call ratio is 0.65, still favoring the bulls. A notable 78,000 open call contracts between $35 and $41 could act as a magnet, while another 58,000 call options sit at the $45 and $50 strikes for March 21. Rolling shorter-term call positions into these longer-dated strikes may be a prudent move.
Volume has also been a key indicator. Since November, daily trading volume has remained consistently elevated, rarely dipping below 10 million shares and peaking at 21 million on Friday. This is a sharp contrast to the 2-6 million daily average seen from late 2021 until November 2024. Back in the early Covid days, MRNA would regularly trade 20-40 million shares in a day, and the recent surge in volume suggests renewed interest. Taken together, the combination of fundamental catalysts, institutional accumulation, technical indicators, and options flow presents a strong bullish case for Moderna, with significant upside potential in the weeks ahead.
Moderna, Inc. (MRNA) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held MRNA at the end of the third quarter which was 34 in the previous quarter. While we acknowledge the risk and potential of MRNA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MRNA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.