If I’d invested £1,000 in Moderna shares 2 years ago, here’s what I’d have now!

Modern (NASDAQ:MRNA) is one of the most stable stocks in the world. The company became a household name during the pandemic with mRNA vaccines being used around the world. But this market is shrinking fast.

So let’s take a closer look at the stock and what the biotech specialist will do.

Up and down

Moderna’s stock soared during the pandemic. Two years ago, the stock was worth $130. By late summer 2021, the vaccine maker’s stock was trading at nearly $500.

However, the stock price is unsustainable despite strong demand Spikevax – Covid-19 vaccine. Shares fell four times. Today, it is trading at $140 – 20% above its 52 week high.

The stock is up 8% in two years. So if I had invested £1,000 in shares two years ago today, would I have £1,080? Inadequate.

I have to take currency fluctuations into account as Moderna is listed in the US. The pound is about 14% weaker against the dollar today than it was two years ago. So, an investment of £1,000 would be worth £1272 today.

This is a very good return – about 13.5% per year. However, it is worth noting that most of these results are due to the pound weakening.

What’s next?

Moderna pipes are very interesting. It is testing treatments for a variety of illnesses and diseases, from cancer to HIV, using novel mRNA technology. However, it did not please investors.

The result of Spikevax it’s slow. It generated $18.4bn in Covid vaccine sales last year, and projects at least $5bn in 2023. This will fall to around $2bn or less in 2024. This revenue stream will eventually die.

The problem is, Moderna is unlikely to replace this revenue generation in the coming years because only the Covid vaccine is a commercial product at the moment. And while the prospects for effective vaccines for flu, cancer and HIV look amazing, trials usually – with the exception of Covid treatments – take up to a decade, or longer. And, of course, most vaccine or treatment trials are unsuccessful.

For some, it looks like a one-hit wonder.

Every investment has a risk, but with this stock I see it as more than a gamble. The success of this multi-billion dollar company depends on unproven treatments. I know very well that mRNA technology is very promising, but there are huge risks involved, and it is a scary prospect.

One big positive is Moderna’s sizable cash reserves. Cash, cash equivalents and investments were $18.2bn at the end of Q4, up from $17bn at the end of Q3. This means it can continue to finance the development of new vaccines without borrowing.

However, I did not buy the stock. Not yet. The stock has an enterprise value of $45bn. To me, that’s great value for a business with unsecured future cash flow.