Vaxart Incorporated (NASDAQ: VXRT), wrenched the spotlight off COVID-19 frontrunners after its oral vaccine received funding from “Operation Warp Speed,” Trump’s accelerated vaccine program. The funding is causing investors to empty their wallets into the stock. The stock did skyrocket to the moon initially. However, now VXRT is following a downward spiral. Investors just becoming aware of the price-sensitive data are apprehensive about whether or not to pull the investment trigger. Because after all, jumping on speculative COVID-19 stocks can leave you burnt. In saying that, let us get to the bottom of the Vaxart investing dilemma today.
Table of contents 1. Why is VXRT up? 2. What is Vaxart's COVID-19 company so special? 3. Should you invest in VXRT?
Trump Administration funds Vaxart’s pre-clinical study.
On Friday Vaxart announced that its oral COVID-19 vaccine would be tested on monkeys infected with the new coronavirus under “Operation Warp Speed”. Operation Warp Speed strives to expedite the clinical trial and produce a viable COVID-19 drug by the end of the year. Initially, you might think that the government is cutting clinical trial corners. However, Dr Fauci stresses that Operation Warp does not compromise the safeness of the drug.
Instead, Operation Warp Speed symbolises a financial risk. The government is essentially saying we will pour money into vaccine companies under the assumption that it works. The funding will shorten the clinical timeline. Ultimately, producing a viable vaccine in a short period of time. If some vaccine companies do not work, we lose a lot of money, but the numbers game should produce a successful candidate. Also, the government would rather lose a lot of money than lives. Because in this climate, time costs lives.
Thus, when Vaxart announced its acceptance into Operation Warp Speed Investors went bezerk, triggering a 100+% rise at the bell. Because the US government is backing the vaccine, which means clinical trial results should come sooner.
How does VXRT’s vaccine work?
Vaxart oral COVID-19 vaccine candidate is in an oral tablet form. The tablet is stable at room temperature, making the shipping progresses much easier. Vaxart’s oral tablet aims to produce antibodies that act as a defence against COVID. The pre-clinical results indicated that all animals that were dosed with the vaccine received anti-COVID-19 antibodies only a few weeks after their vaccination. Overall, we have an oral vaccine that is easy to ship and holds positive antibody data from animal trials.
Is the VXRT vaccine another loose end or is there potential?
Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
Short answer: VXRT could potentially be a smart investment. However, trade at your experience.
It is easy to hear about a COVID-19 vaccine company and jump in. It is hard to take a step back and dive in with the best investment strategy. Because greed and FOMO constantly play on our minds.
Swing trading VXRT
We all know that Vaccine companies experience a decent dose of bear attacks and raging bulls. At face value, it seems the bears own the chart. However, VXRT is up 20% in pre-market trading. Suggesting the bulls still have control. Some investors might look at the chart and be pessimistic. However, Friday’s low is still a higher low than Thursday. Meaning yes you will have rollercoaster days but if the end result is a higher low then the bulls 100% own the chart. Thus, if positive news around VXRT continues to circulate and the virus rages on we could see a swing trade become profitable (opinion not advice).
However, do not disregard that volatility is high in a shorter period of time. Meaning you could invest with the hope of making a quick gain but could get left on the side of the road with a loss. Overall, if you are an experienced trader, you have the time to monitor your investment, and have an above average risk threshold than a swing trade could be for you.
Long to medium approach Vaxart-COVID strategy
In comparison, to swing trading long-term investing is like eating your ice-cream in 30 minutes instead of 1 minute. Investors looking to go long off VXRT would want to get in off a bear attack. Wait for a sell-off, then jump in. (opinion not advice) Again it is harder to take a step back but sometimes it can pay off long to medium term. The expiration date on a long-medium term investment is not fixed. If the virus continues to magnify and the Vaxart’s future trial data is promising you may want to extend your investment and vice versa. However, if the price continues to drop make sure you have a stop loss in place. Because sometimes the long-medium approach does not plan out. If you hope VXRT will come back when there is no reason for it to rise, your ice-cream will have completely melted.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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Written by Patrick McLoughlin, Senior Manager of YIG.