We recently compiled a list of the 10 Worst Performing NASDAQ Stocks in 2024. In this article, we are going to take a look at where Moderna, Inc. (NASDAQ:MRNA) stands against the other Worst Performing NASDAQ Stock in 2024.
Factors Driving Market Growth
Markets have been soaring for the better part of the year, with pullbacks acting as entry levels from where investors have joined and pushed the market higher. While artificial intelligence was one of the factors that drove many tech stocks higher, earnings results that were better than expected also had a significant impact.
Similarly, a resilient US economy that has stayed clear of recession amid high interest rates and inflation has also supported the upward momentum. With the NASDAQ and other major indices at all-time highs, investors are becoming increasingly concerned whether the strong upward momentum is sustainable.
READ ALSO: 10 Most Promising Future Stocks According to Analysts and 10 Most Promising Growth Stocks According to Hedge Funds.
Challenges and Investor Concerns
Valuations appearing overstretched after one of the longest bull runs are one factor that is sending jitters among the investment community. Similarly, concerns over the negative impact of high interest rates and uncertainty over the US election are slowly curtailing the upward momentum.
Bryn Talkington, managing partner of Requisite Capital Management, believes markets will remain choppy heading into year-end owing to the uncertainty around the US election.
“Until the election is over and we can confirm gridlock, I think at the headline number we’re not going to do much, but I think underneath the surface we’re going to see the haves and have nots,” she said.
Nevertheless, it is the impact of the soaring geopolitical tensions in the Middle East that threatens to affect supply lines that are keeping the markets on edge. The prospects of energy prices surging and fueling inflation on Israel attacking Iran is also taking a significant toll on investor’s sentiments on equities.
While interest rate cuts were expected to be the catalyst to push the equity markets to record highs, that was not the case, as everything seemed to have already been priced. Paul Christopher, head of investment strategy at Wells Fargo Investment, believes the US Federal Reserve is unlikely to cut aggressively as the better-than-expected jobs report in September and renewed worries of a spike in inflation act as a deterrent.
“Just really not ready to cut quite as aggressively as the markets had previously priced. I think if you take November from a half a point down to a quarter point hike, that’s not really a big deal, but it does require some adjustment in markets. There may be some adjustments to rate expectations for December and January as well,” he told CNBC’s “Squawk Box Asia” earlier this month.
While the US economy does not show enough deterioration to justify aggressive cuts, there are stocks listed on the NASDAQ that have underperformed, attributed to a number of factors. Top on the list are companies whose core businesses are negatively impacted by high interest rates that tend to affect consumer purchasing power.
Likewise, some of the worst-performing stocks in the NASDAQ have also taken a hit on high inflation. While inflation has started showing signs of edging lower even as the Fed continues to cut rates, some of the worst-performing stocks are showing signs of bottoming out as macroeconomics improves.
The October BofA Global Fund Manager survey indicates that investors are more optimistic than they have been in four years. 74% of investors think the United States will avoid a recession, demonstrating their optimism about the economy.
Likewise, Michael Hartnett, an investment strategist at BofA, said that investor sentiment is rising due to expectations of further rate cuts by the U.S. Federal Reserve and hopes that Beijing will release more stimulus to strengthen its economy.
Source: Pexels
Our Methodology
We utilized a stock screener to find NASDAQ-listed stocks with market caps exceeding $2 billion as of October 16. We then sorted the stocks in descending order based on their year-to-date share price performance. From this dataset, we identified the NASDAQ stocks with the largest YTD share price declines as of October 16. The following stocks are listed in descending order of their share price performance.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Moderna, Inc. (NASDAQ:MRNA)
Year to Date Gain: -49.18%
Number of Hedge Fund Holders: 39
Investors once favored Moderna Therapeutics in the healthcare industry due to the strong demand for COVID-19 vaccines. However, not anymore. It is turning out to be one of the worst-performing NASDAQ stocks in 2024, having shed 49.18% in market value.
The company announcing expensive cost cuts that could affect its pipeline programs and terminate others underline trouble in paradise. Moderna, Inc. (NASDAQ:MRNA) has already announced plans to slash its research and development expenditure by up to $1.1 billion, raising concerns about its ability to strengthen its pipeline.
Additionally, management warnings that it could take some time before the company bounces back to profitability underlines why the stock has been under pressure for the better part of the year.
Since demand for the company’s coronavirus vaccines declined significantly over the past two years, its fortunes have not been good. In the second quarter of this year, its quarterly revenue reached $241 million, a 95% decline over the previous three years.
On the other hand, Moderna, Inc. (NASDAQ:MRNA) is laying a strong foundation that might support its long-term prospect. Starting with more recent approvals, Moderna has received approval for an RSV vaccine and is expected to introduce at least one more product in the coming years. In a phase 3 study, the company’s coronavirus/flu vaccine performed better. It produced greater immune responses in its late-stage trial than some individual vaccines in both categories.
Even though Moderna’s current financial results don’t inspire confidence, a robust pipeline of vaccines affirms a potential bounce back after the recent slump. In total, 39 hedge funds were long Moderna, Inc. (NASDAQ:MRNA) in the second quarter, with a total stake value of $1.3 billion.
Overall MRNA ranks 2nd on our list of 10 Worst Performing NASDAQ Stocks in 2024. While we acknowledge the potential of MRNA as an investment, our conviction lies in the belief that 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, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
