How to Buy Moderna Stock: Invest in Drug and Vaccine Development
With the onset of the coronavirus pandemic, many people have gained an interest in investing in pharmaceutical companies like Moderna and AstraZeneca.
Buying shares in drug and vaccine makers can be difficult, but lucrative.
If the company you invest in develops an effective medicine, its shares may increase in price.
However, if the medicine fails, its shares could fall significantly.
If you’re interested in buying shares in Moderna, here are things to keep in mind.
Moderna (ticker symbol MRNA traded on the NASDAQ) is a pharmaceutical company based in Cambridge, Massachusetts.
The company develops new drugs, vaccines, and other medicines.
Specifically, Moderna uses new technologies based on messenger RNA, molecules that include information about a gene’s genetic sequence, to develop these medicines, rather than using traditional methods.
The company went public in December 2018, becoming the largest biotech IPO in American history with an initial valuation of $7.5 billion.
As of July 2020, none of the medicines and vaccines developed by Moderna reached large-scale testing.
However, the company’s vaccine for COVID-19 has produced some positive results during phase one of testing.
Update: On December 18, 2020, the U.S. Food and Drug Administration issued an emergency use authorization (EUA) for the second vaccine for the prevention of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2)
Research and Analysis
When considering any investment, doing your due diligence and researching the company is essential.
Everyone’s approach to researching an investment is different.
There is no single correct research strategy and there is no method that guarantees success.
Some investors choose to look at the company’s underlying financial situation.
This type of fundamental analysis looks at things like a company’s revenue, expenses, debts, and the development of new products.
Investors also consider factors such as the historical success of the company’s management team and larger industry trends.
Notable competitors include:
- Gilead Sciences (GILD)
- Biogen (BIIB)
- BioNTech (BNTX)
Other traders use technical analysis to make investment decisions, examining price and volume trends in how the share trades on the stock market.
Keep in mind:
Even if a company looks great on paper and investor sentiment is positive, there’s no guarantee that an investment will succeed.
The company could fail to continue its positive direction, or the market may already have the company’s future growth priced in.
Investing in pharmaceutical companies can be particularly risky, so its important to understand the risks before you buy shares.
The success of many pharmaceutical companies, especially small ones, lies in the success of the medicine they develop.
It can cost millions or billions of dollars to bring a new drug to market and not every drug that a company develops succeeds.
Some drugs may prove to be unsafe to use or to produce major side effects.
Sometimes, the drugs simply don’t work, failing to help people get better or not protecting people from disease.
For a small pharmaceutical company with just one or two medicines in development, if a trial produces negative results, it could cause the company’s share price to tank or make the company fail entirely.
Long development cycles
Also, keep in mind that drug development can take a long time.
Some companies might not be able to start trials for years after they first begin developing a new medicine.
These companies can remain stagnant for years or run out of money and fold.
Successful trials don't guarantee stock price increase
Finally, remember that a successful medical trial result doesn’t guarantee that a company’s stock price will increase.
Investors may be so confident in a trial’s results that success is already baked into the price.
You could buy shares ahead of a trial, hoping for a huge gain, only to see share prices barely move at all.
Other Ways to Invest in Drug and Vaccine Development
Investing in individual companies is risky.
You’re putting all of your eggs in one basket, so if that basket fails, you’ll lose a lot of money.
Diversifying your portfolio is essential if you want to reduce your risk.
This leads many investors to use other strategies when investing in the development of new medicines.
One popular strategy is buying shares in mutual funds or exchange-traded funds (ETFs) that focus on medical or biotech companies.
These funds hold shares in dozens or hundreds of medicine and biotech firms, making it easy for you to build a diverse portfolio while only buying shares in a single security.
If you’re particularly interested in investing in a single company, like Moderna, you can view the fund’s portfolio before investing.
Mutual funds typically tell investors what securities are included in their portfolios, so you can make sure the stocks you want to invest in are included.
How to Buy Moderna Shares
If you’ve decided that you want to invest in Moderna or another company, the first thing that you’ll need to do is open a brokerage account.
Open a brokerage account
Brokerage companies give you a way to purchase shares in mutual funds, ETFs, and individual companies.
Some brokerages, like Vanguard and Fidelity, offer their own suite of mutual fund and ETF options, so if you want to invest in mutual funds you might want to choose the company that offers funds you like.
Other things to consider include the commissions the broker charges, as well as tools that it offers, like access to research and stock screeners.
Once you’ve chosen a brokerage to work with, you have to open an account.
That typically means filling out an application, providing some identifying information, and linking a bank account that you can use to fund your brokerage account.
Place a buy order
Once you’ve done that, you’re ready to buy shares. There are two types of transactions you can use to buy stocks.
If you submit a buy order, you simply specify how many shares you want to buy. Your broker will buy that many shares at the cheapest price available.
If you submit a buy-limit order, you specify the number of shares to buy and the maximum price you’re willing to pay per share. If the shares are available at or below that price, your broker will execute the order. Otherwise, the order doesn’t go through.
Market orders are simple and easy to enter, but you might not get the price you expect.
Limit orders are generally safer because you can guarantee the maximum price that you’ll pay.
However, limit orders run the risk of not going through at all.
Remember, investing is subject to risk. You could lose some or all of the money you invest, so don’t invest money that you cannot afford to lose.
Consult an Advisor
Investing in pharmaceutical companies like Moderna can be exciting.
Sometimes, successful medical trials can lead to huge spikes in a company’s stock price.
However, unsuccessful trials can lead to major losses, so it’s important to understand the business you’re investing in, and the risk, before you jump in.
As with all investing, you are putting your money at risk, so only invest money you can afford to lose.