Here’s Why Moderna’s Stock Could Crash Before the End of 2021

If you invested in COVID-19 vaccine maker Moderna (NASDAQ:MRNA) last year, you’re likely sitting on a fantastic return, as the stock is up more than 500% in 12 months (the S&P 500 has increased by just 31%). But the danger in continuing to hold the stock or buying it today is that it could crash in the months ahead, perhaps even before the end of 2021.

With a pricey valuation that’s significantly higher than analyst price targets and a business that today is dependent on COVID-19, it may only be a matter of time before a correction takes place. Here’s a closer look at why I wouldn’t be surprised if the stock were to fall.

Moderna could soon face more competition in the U.S.

Currently, Moderna is just one of three companies (the others being drugmakers Johnson & Johnson and Pfizer) with COVID-19 vaccines that are available for use in the U.S. market. But there could soon be another, from vaccine maker Novavax. That company plans to apply for Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration for its vaccine before the year is over. If that happens, expect some downgrades from analysts, as it could be a sign that market share for Moderna will shrink in the U.S.; Novavax may even become the better stock to buy.

Plus, with vaccination rates on the rise in the U.S. — more than 50% of those eligible are fully vaccinated — the pool is already shrinking. While there may be a market for booster shots next year, scientists are conflicted on whether that’s necessary. And even if people take the shots, that would just be one extra dose compared to the two shots needed for someone to be fully vaccinated (with the Pfizer and Moderna versions).

As a result, the focus will inevitably shift to other countries where there are more vaccines for people to choose from. In addition to that, Moderna’s vaccine may be less competitive due to its high price.

Even more challenges outside the U.S.

Moderna recently increased its price per dose in Europe, from $22.60 a dose up to $25.50. That’s steep compared to AstraZeneca, which offers its vaccine at cost at just a couple of dollars per dose. Vaccines from Sanofi and GlaxoSmithKline are also cheaper than Moderna, coming in at less than $10 per dose. With a significant premium compared to its rivals, Moderna’s vaccine may prove to be a tougher sell for countries that have more options available.

As of June, the U.S. government has ordered 500 million doses of Moderna’s vaccine, while in Europe, officials have purchased 460 million doses. Although that’s not a huge disparity, Europe’s population of about 750 million people is more than twice the size of the U.S.

In other parts of the world, the pricing is going to be even lower. Covax, which is a worldwide initiative to help all countries get access to COVID-19 vaccines, has secured up to 500 million doses of the Moderna vaccine. But only 34 million of those vaccines…