Wall Street generally got off to a good day on the first trading day in May. However Nasdaq Composite (NASDAQINDEX: ^ IXIC) was the only laggard among the major indices, falling about a third of a percent as of 2:30 pm ET Monday afternoon, even as other major benchmarks climbed to record highs.
Several stocks played a notable role in Monday’s fall in the Nasdaq. Biopharmaceutical company Novawax (NASDAQ: NVAX) received bad news about the COVID-19 vaccine and Tesla (NASDAQ: TSLA) it looks like a delay that could hinder his plans to increase production of electric vehicles (EVs) in the near future.
Waiting is the hardest for Novavax
Novavax shares fell more than 16% on Monday afternoon. The company has a promising candidate for a COVID-19 vaccine in the form of NVX-CoV2373, but investors were not happy with the potential timing of the proposed vaccine distribution if approved.
Novavax has been working on an agreement with the European Union to provide NVX-CoV2373 for vaccination for several months now. However, due to some problems with the supply chain, she had to postpone the final deal. Now it seems that even if the agreement is signed, Novavax will still not deliver most of the expected 200 million doses until 2022. Given the slow pace of vaccinations in many countries around the world, it shouldn’t be too late to play a part, but still not as fast as expected.
However, investors largely ignored some of the good news. The company also said it will begin expanding its phase 3 vaccine candidate trial to include young adults between the ages of 12 and 17. If the trial is successful, it could mean a reduction in the age at which people can take the vaccine. Currently, the vaccine is not available for people under 16 years of age, even with permission for use in an emergency.
Novavax has lost almost a third of its value in just the past few months. This shows how impatient shareholders are for the company to pass the tests and prove the NVX-CoV2373 is effective, although there are still good opportunities for its use.
Delays for Tesla
Tesla shares, meanwhile, fell nearly 4% on similar concerns over delays. The electric car maker has pledged to boost production at a healthy pace for the foreseeable future, but a potential problem with a key project could prove to be an obstacle.
Tesla has been expanding its manufacturing facilities for quite some time now, with plans to open new manufacturing facilities at key locations around the world. However, over the weekend, there were reports that the planned construction of Tesla’s Berlin Gigafactory in Germany may not be able to unfold until the end of 2021. This is significantly later than expected in July.
This is bad news for the more ambitious analysts following Tesla. The company hoped for a 50% increase in car shipments in 2021, which will amount to about 750,000 vehicles. However, some analysts have looked for more than 900,000 Tesla shipments, citing the upcoming Berlin Gigafactory opening as a key stakeholder. If the plant does not open this year, it will be very difficult to achieve more.
What’s unclear is to what extent Tesla’s skyrocketing share price in 2020 was based on an immediate increase in production and supply. Stocks plunge today is small compared to last year’s gains, but if Tesla hadn’t been able to get things back on track, it might just be the start of a larger pullback.
This article represents the opinion of an author who may disagree with the “official” position of the Motley Fool premium advisory service. We are colorful! Bidding on an investment thesis – even our own – helps us all to be critical about investing and make decisions that help us become smarter, happier, and richer.