The day after Moderna's stock posted its biggest one-day gain on record, it is on track for its largest percent drop in more than two years as investors digested the news and adjusted their positions.
Prior to Wednesday's rally on positive mRNA cancer vaccine data, Moderna's stock had substantial short interest at 13.7%. A so-called short squeeze, wherein short sellers buy back stock to moderate losses, likely contributed to the stock's meteoric Wednesday rise, analysts said. Thursday's move reflects the market cooling off, they said.
"Probably you had a lot of shorts who got it wrong covering, which put a lot of paraffin on the flame," said Brookline Capital Markets analyst Leah Cann. "In the days after, they moderate a bit, and it settles down."
UBS said its clients sold a record $44 million in Moderna shares Wednesday, suggesting some investors were cashing out after the rally. "The stock traded nearly 200 million shares yesterday, roughly half of shares outstanding, suggesting a significant amount of short covering and fast-money repositioning likely occurred in a single session," said UBS analyst Michael Yee. "Once that buying demand was exhausted, some pullback was to be expected."
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