Once high short data collides with a significant catalyst the possibility of a short squeeze skyrockets. This might be the case for struggling Novavax, Inc. (NASDAQ: NVAX) which faces the risk of filing for bankruptcy due to the waning demand for Covid vaccines. With this in mind, NVAX’s Covid vaccine was recently endorsed by the EMA for full approval which increases its chances of being included in the EU stockpile efforts. If the vaccine gets included in the EU stockpile, NVAX stock could be poised for a rebound as bankruptcy risk may be alleviated – which increases the chances for a short squeeze.
NVAX Fundamentals
COVID-19 made it abundantly clear that vaccine producers are a vital component of our healthcare apparatus. That said, demand for COVID-19 vaccines has been waning ever since the end of the pandemic. Major vaccine producers such as AstraZeneca PLC (NASDAQ: AZN) recorded sharp declines in revenue due to this waning demand as it reported a 64% YoY decline in revenues in its Q2 earnings. Similarly, NVAX experienced a steep fall in revenue from $703 million in Q1 2022 to $80 million in Q1 2023. NVAX is currently struggling due to this decrease in demand and may even face bankruptcy with the company stating that it is operating as a going concern in its Q1 report.
Bankruptcy Risk
Due to the decline of COVID-19 vaccine demand NVAX suffered a significant blow to its revenue stream as its product sales declined more than 100% in Q1 due to declining demand and a $65 million revenue reversal associated with doses delivered in 2022 that are scheduled for future replacement. Additionally, NVAX has a cash balance of $624.9 million which would fund the company for 2 quarters at its current cash burn rate. Looking to cut expenses to navigate through this dire financial state, NVAX laid off 25% of its workforce, however, this might not be enough as the company’s cash burn rate is significantly high.
EMA Endorsement
Despite this, there might be a ray of hope for NVAX as its Nuvaxovid Covid vaccine was endorsed by the EMA for full authorization. This move might save the company from bankruptcy since full authorization could be critical for NVAX as the EU is stockpiling Covid vaccines and the EMA’s endorsement could be the first step for inclusion in the stockpile. Currently, the EU has a population of 748 million and the EU’s efforts to stockpile vaccines could provide NVAX with substantial revenues if its vaccine is included. In this way, the potential revenues could offset the company’s costs which would eliminate the risk of bankruptcy.
Short Data
Considering the company’s financial woes, NVAX stock is witnessing a strong short selling activity with a short interest of 38.6%, 38.7% of its float on loan, and a 100% utilization rate. If Nuvaxovid is fully authorized and is included in the EU stockpile, NVAX would be able to stave off bankruptcy which might trigger a short squeeze thanks to NVAX stock’s short data.
NVAX Financials
According to its latest Q1 earnings NVAX’s total assets sharply declined QoQ from $2.2 billion to $1.5 billion QoQ with its cash on hand declining from $1.3 billion to $624 million. However, liabilities decreased QoQ from $2.8 billion to $2.4 billion with current liabilities declining to $124 million from $216 million.
In terms of revenues, NVAX reported a steep YoY decline from $703.9 million to $80.9 million due to declining demand for Covid vaccines and a $65 million revenue reversal associated with doses delivered in 2022 that are scheduled for future replacement. At the same time, operating costs decreased YoY from $494.6 million to $393.7 million. Despite this, NVAX’s net profit of $203.4 million in Q1 2022 turned into a net loss of $293.9 million in Q1 2023.
Technical Analysis
NVAX stock is in a bearish trend with the stock trading in a downward channel. Looking at the indicators, NVAX is trading below the 200, 50, and 21 MAs – with the stock testing the 21 MA as a resistance. Meanwhile, the RSI is neutral at 49 and the MACD is neutral.
As for the fundamentals, the main catalyst for NVAX stock is staving off bankruptcy risk. With the EMA endorsing the company’s Covid vaccine for full authorization, NVAX’s chances of survival are higher than ever since its vaccine could be included in the EU stockpile. Considering the stock’s short data, a short squeeze could occur if Nuvaxovid is included in the EU stockpile – eliminating the risk of bankruptcy.
NVAX Forecast
NVAX is in dire financial straits and its only saving grace is the current EU’s vaccine stockpiling efforts. That said, a short squeeze is likely due to the EMA’s recent promotion of Nuvaxovid, which could be seen as a step towards inclusion in the European stockpile. However, inclusion is not assured and if Nuvaxovid is not included, then bankruptcy could be inevitable.
NVAX Fundamentals
COVID-19 made it abundantly clear that vaccine producers are a vital component of our healthcare apparatus. That said, demand for COVID-19 vaccines has been waning ever since the end of the pandemic. Major vaccine producers such as AstraZeneca PLC (NASDAQ: AZN) recorded sharp declines in revenue due to this waning demand as it reported a 64% YoY decline in revenues in its Q2 earnings. Similarly, NVAX experienced a steep fall in revenue from $703 million in Q1 2022 to $80 million in Q1 2023. NVAX is currently struggling due to this decrease in demand and may even face bankruptcy with the company stating that it is operating as a going concern in its Q1 report.
Bankruptcy Risk
Due to the decline of COVID-19 vaccine demand NVAX suffered a significant blow to its revenue stream as its product sales declined more than 100% in Q1 due to declining demand and a $65 million revenue reversal associated with doses delivered in 2022 that are scheduled for future replacement. Additionally, NVAX has a cash balance of $624.9 million which would fund the company for 2 quarters at its current cash burn rate. Looking to cut expenses to navigate through this dire financial state, NVAX laid off 25% of its workforce, however, this might not be enough as the company’s cash burn rate is significantly high.
EMA Endorsement
Despite this, there might be a ray of hope for NVAX as its Nuvaxovid Covid vaccine was endorsed by the EMA for full authorization. This move might save the company from bankruptcy since full authorization could be critical for NVAX as the EU is stockpiling Covid vaccines and the EMA’s endorsement could be the first step for inclusion in the stockpile. Currently, the EU has a population of 748 million and the EU’s efforts to stockpile vaccines could provide NVAX with substantial revenues if its vaccine is included. In this way, the potential revenues could offset the company’s costs which would eliminate the risk of bankruptcy.
Short Data
Considering the company’s financial woes, NVAX stock is witnessing a strong short selling activity with a short interest of 38.6%, 38.7% of its float on loan, and a 100% utilization rate. If Nuvaxovid is fully authorized and is included in the EU stockpile, NVAX would be able to stave off bankruptcy which might trigger a short squeeze thanks to NVAX stock’s short data.
NVAX Financials
According to its latest Q1 earnings NVAX’s total assets sharply declined QoQ from $2.2 billion to $1.5 billion QoQ with its cash on hand declining from $1.3 billion to $624 million. However, liabilities decreased QoQ from $2.8 billion to $2.4 billion with current liabilities declining to $124 million from $216 million.
In terms of revenues, NVAX reported a steep YoY decline from $703.9 million to $80.9 million due to declining demand for Covid vaccines and a $65 million revenue reversal associated with doses delivered in 2022 that are scheduled for future replacement. At the same time, operating costs decreased YoY from $494.6 million to $393.7 million. Despite this, NVAX’s net profit of $203.4 million in Q1 2022 turned into a net loss of $293.9 million in Q1 2023.
Technical Analysis
NVAX stock is in a bearish trend with the stock trading in a downward channel. Looking at the indicators, NVAX is trading below the 200, 50, and 21 MAs – with the stock testing the 21 MA as a resistance. Meanwhile, the RSI is neutral at 49 and the MACD is neutral.
As for the fundamentals, the main catalyst for NVAX stock is staving off bankruptcy risk. With the EMA endorsing the company’s Covid vaccine for full authorization, NVAX’s chances of survival are higher than ever since its vaccine could be included in the EU stockpile. Considering the stock’s short data, a short squeeze could occur if Nuvaxovid is included in the EU stockpile – eliminating the risk of bankruptcy.
NVAX Forecast
NVAX is in dire financial straits and its only saving grace is the current EU’s vaccine stockpiling efforts. That said, a short squeeze is likely due to the EMA’s recent promotion of Nuvaxovid, which could be seen as a step towards inclusion in the European stockpile. However, inclusion is not assured and if Nuvaxovid is not included, then bankruptcy could be inevitable.