Biotech company and Covid-19 vaccine maker
officially became a member of the
index on Wednesday, jumping 4.5% on day one as a member of the widely followed large-cap benchmark.
Moderna stocks (ticker: MRNA) have had an incredible rally during the coronavirus pandemic. From Wednesday close, stock had increased by 208% so far. Moderna is now the top-performing stock of the S&P 500 this year, beating the previous leader,
(LB), which has increased approximately ongeveer 103%.
The strong performance comes, of course, from Moderna’s successful vaccine against Covid-19. Not only has the vaccine provided the company with a torrent of revenue, its success has proven the value of its mRNA technology and highlighted its potential for use in other ways. The company also develops vaccines and drugs targeting areas such as cancer, HIV, Zika and heart disease.
Moderna has received an extra boost since the S&P Dow Jones Indices announced its addition to the S&P 500 last Thursday. The stock has since risen 24% as investors bought the shares in anticipation of gains from the index change.
Moderna has replaced
(ALXN), which will soon be acquired by
It now accounts for about 0.26% of the index.
With nearly $5 trillion in passive assets tracking the S&P 500, that means the index funds have bought about $13 billion worth of Moderna stock. That’s about 10% of the company’s total market cap as of Tuesday.
Not surprisingly, Moderna was one of the most traded names on Tuesday, as passive funds tracking the S&P 500 tried to buy the stock to match the index’s performance.
More than 123 million Moderna shares worth about $39 billion were exchanged, 12 times more than the average daily volume of 10 million shares of the stock over the past three months. Shares of Moderna rose a whopping 9% on Tuesday but closed 2% lower for the day.
Moderna’s inclusion in the S&P 500 also means that actively managed funds that measure their performance against the index are more likely to buy their shares.
Still, history has shown that inclusion in the S&P 500 can be bearish for new members, rather than bullish. The index routinely adds stocks whose market capitalization has risen far enough to qualify for inclusion and removes stocks that fall below that range.
Shares of companies that participate in the index generally rise before being included but fall in the following months. Seven months after Tesla joined the S&P 500 in December, for instance, the stock is down 6%, while the index itself is up nearly 18%.
While Moderna is expected to make blockbuster profits this year thanks to sales of its coronavirus vaccine, future earnings depend on whether the company can develop products that will make money after the pandemic ends.
Now that stocks are at record prices, few on Wall Street see an increase in the stock. Among a dozen analysts polled by FactSet, the average price target for the next 12 months is $188, while the stock is currently trading around $321.
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