After the March market crash, some investors picked up the generally strong stocks that were having a difficult period. It may take a while to recover, but long-term investors know it’s okay, and the purchases will pay off in the months or years to come. Others opted for actions that seemed immune to the coronavirus outbreak and had been steadily increasing since the beginning of the year.
And then there were investors looking for the best short-term purchases or stocks that would likely produce a quick and abrupt profit. Today, many of these stocks are manufacturers of coronavirus vaccines. The race to bring a vaccine to market is underway, the US government is funding multiple companies, and many short-term investors are moving from one stock to another according to the news of the day.
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That’s what often happens at Robinhood, an online trading platform that appeals to young investors. Robinhood is known for its commission-free trading and free stock offering when you invite your friends to the platform. Data tracking shares owned by Robinhood indicate that many Robinhood investors like stocks that may be among the riskiest, for example, those of the companies that suffered the most during the crash or the stocks of the manufacturers of coronavirus vaccines, which have skyrocketed as investors speculate about what The company will introduce the winning vaccine.
What stocks of coronaviruses are Robinhood’s favorites?
So which two coronavirus stocks are the favorites right now among Robinhood investors? Modern (NASDAQ: MRNA) and Inovio Pharmaceuticals (NASDAQ: INO). Through the platform, more than 295,000 people own Moderna shares and more than 221,000 Inovio’s own shares, according to Robinhood data. That places them among the 100 most popular stocks on the platform.
Knowing that many Robinhood investors are looking for short-term gains, should you be concerned if you are a shareholder in Moderna or Inovio? Does this mean that Moderna and Inovio, with an increase of 318% and 639%, respectively, so far this year, will continue (perhaps) to skyrocket and then collapse?
Not necessarily. The fates of Moderna and Inovio depend on the data from their coronavirus vaccine trials. Meanwhile, the trend in Robinhood is a reflection of what’s happening on the market: Moderna and Inovio have become extremely sensitive to the news about the coronavirus vaccine. Robinhood investors know this and want to get involved in the day-to-day action.
If any of the companies makes a positive comment about their vaccine development program, stocks go up. If the company stumbles or a rival nears the finish line, stocks fall. For investors with a risk appetite, money can be gained (or lost) very quickly.
Vaccine Trial Results
But only the results of vaccine trials will determine whether Moderna and Inovio’s actions will extend gains in the long term, stay around current levels, or sink. Both companies are currently testing their coronavirus vaccines in humans. Both reported positive provisional data from the phase 1 trials, although it is still too early to say whether their candidates will move to phase 3 and go on the market.
If Moderna and Inovio are successful, they will have established that their technologies work in humans, and the additional bonus will be a product on the market. So far, both companies remain in the clinical stage, and the products marketed, in addition to the coronavirus vaccine, are probably a few years away.
The successful development of the coronavirus vaccine could translate into long-lasting stock gains, but if companies fail, it seems unlikely that stock prices will remain at current levels or rise further.
So should you sell Moderna or Inovio shares because short-term investors favor them? No, not for that. Instead, look at the data from vaccine trials as a guide, and stay at your comfort level when it comes to risk. You may consider selling shares of these biotech companies if you have concerns about your coronavirus vaccine programs reaching the target, and / or if you prefer to limit risk within your portfolio. For the moment, Moderna and Inovio are left to the most aggressive investors.
