At first glance Moderna (MRNA) and Tesla (TSLA) seemingly have very little in common with each other besides than the fact they are both publicly traded companies. But there is one growing similarly between them as a cult-like following of Moderna now has some claiming it to be the “Tesla of biotechnology”.
Being a Tesla of x or y industry probably doesn’t mean so much that it's on the cutting edge of technology and is innovating a stale industry, as much as it means there is a hive mentality by groups of people who swear by the firm and will follow Elon Musk to ends of the earth - or moon I guess in Musk’s example.
What’s Going on with Tesla?
The overvaluation of Tesla stock has been discussed ad nauseum and there’s no reason to beat a dead horse. Simply put, TSLA has the highest market cap of any stock outside of the big five (Apple, Microsoft, Alphabet, Amazon, and Facebook) while producing less than a third of the amount of vehicles General Motors (GM) sold last quarter. Tesla is a drastically smaller operation than the major automotive manufacturers but its stock price is heavily inflated by future projections and meme/cult/reddit like trading of its stock.
There are a decent amount of reasons to believe in Tesla going forward as it's widely considered to be more of a tech company than simply as an automotive firm that is leading the way on electric vehicles and self-driving cars. Tesla has a large variety of avenues for profit going forward with EV battery and autopilot technology that it can benefit from as other car manufacturers are being forced to focus on transitioning into the EV market - which can largely be attributed to Tesla’s success in popularizing EVs.
What Does This Have to Do with Moderna?
Okay so Tesla is considered overvalued, but so are so many other stocks in this market right now, what makes Moderna unique? Well, consider that Moderna is just a little higher than its $20 share price right before the pandemic with its current price hovering around $400 a share. It’s current price is still over twice its price following the emergency use approval of its COVID-19 vaccine when it was near $150. Naturally traders bet big on the biotech firm following the approval of its vaccine for the virus causing this pandemic, but its current valuation and narrative suggest investors expect far more developments in vaccines and other “products”.
The value of the coronavirus vaccine is extremely difficult to judge as many may expect the profit to be driven from it to be higher than what is currently being estimated. Still, MRNA currently has a higher market cap than firms such as Bristol Myers Squibb who reported revenue of $11.7 billion last quarter, while Moderna reported $4.3 billion. Additionally, that latest revenue has already been heavily impacted by the massive amount of vaccinations being delivered as over 50% of the U.S. is vaccinated. Just two quarters ago, Moderna earned revenues of “just” $570 million.
Traders are starting to follow Moderna similar to Tesla even if a biotech firm isn't as immediately sexy as an EV car/technology company. Many have been trying to bet on which biotech firm is next to pop, but MRNA offers a unique upside as it already has a massive income producing the COVID-19 vaccine. Now it can be one of the largest biotechs to research cures for other diseases and viruses, but it doesn't seem to offer the wide variety of branches for profit that Tesla has.
The biggest problem is that it seems very unlikely that Moderna will create another vaccine that is as important as the coronavirus vaccine again and the company currently has nothing significant in the pipeline to drive profits in the near future. Additionally, while Tesla seems to be significantly ahead of the automotive industry and is pushing innovations, Moderna operates on the cutting edge of biotechnology but is nowhere the leader and revolutionary that Tesla is perceived to be (Pfizer for example managed to beat it out by a week for emergency use authorization).
Wrapping Up
There is a strong hive mentality and cult-like culture right now (btw Donda is a 10/10 and Kanye the GOAT) in investing as reddit and meme traders have pushed many stocks to ridiculous valuations. However, much of the market appears to be “overvalued” right now and some of the hype around these companies can be well warranted. Tesla certainly has many things going for it and Moderna is going to benefit tremendously from its COVID-19 vaccine. Does that mean you should invest in them now? Maybe not, but don’t be surprised if these stocks keep rising before the inevitable fall everyone is trying to predict - but has had little success timing - happens.
