Beware! Your Coronavirus Stock Might Be Crushed by the FDA

The world is desperate for a COVID-19 vaccine. The U.S. government is giving away billions of dollars in grant money in the hopes that somebody, anybody, will find a vaccine that works and will defeat this awful disease. And so far, anyway, investors in this sector have done well.

In the first half of 2020, all you needed for incredible returns was to own a small-cap vaccine biotech; the market rewarded practically any that had a vaccine platform. If you're a small biotech, how do you make your stock price double? Announce that you're pursuing a COVID-19 vaccine. And what happens when you find your candidate? Your stock price doubles again. And what happens when you enter phase 1 trials? Your stock price doubles again.

You might think I'm exaggerating, but if anything, I'm understating what's happened. Novavax (NASDAQ: NVAX) is up 3,429% this year. Mathematicians can tell me how many doubles that is, but I'm pretty sure it's more than three.

Source Fool.com