Moderna Just Joined the Nasdaq-100. Here's What That Means for Investors.
Key Points
The recent meteoric rally of MRNA shares has made Moderna a massive company.
Its market cap has grown so large, in fact, that it’s earned a place among Nasdaq’s largest listings.
Regardless of its size, investors should remain focused on a company’s future fiscal potential, which for Moderna is as promising as the recent accolade suggests.
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Pharmaceutical outfit Moderna (NASDAQ: MRNA) recently raised its status as a prospective investment. Specifically, earlier this month, Nasdaq Inc. -- which owns and operates the Nasdaq Stock Market -- added Moderna to its Nasdaq-100 index. The index tracks the collective performance of the Nasdaq's 100 largest listings that aren't part of the financial sector.
On the surface, it doesn't mean much; it certainly doesn't alter the company's fiscal performance.
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Still, it's a bullish development if only because it puts the company on more investors' radars. It also prompts fund managers overseeing exchange-traded funds (ETFs) meant to mirror the performance of the Nasdaq-100 Index (like the Invesco QQQ Trust (NASDAQ: QQQ)) to purchase this stock, so their underlying portfolios accurately reflect the index.
Image source: Getty Images.
And this can be significant. Invesco's ETF alone now holds on the order of $2 billion worth of Moderna stock -- more than 2% of the $94 billion company -- while about 80% of all outstanding MRNA shares are now institutionally owned. By taking a chunk of already-issued shares out of individual investors' hands and putting them under institutional control where they tend to stay put for a while, a stock becomes more difficult to own, and therefore more expensive for ordinary investors to buy.
It's still not the top reason to consider adding this name to your portfolio, though. That reason remains the potential of its cancer vaccines, and in particular, Moderna's intismeran autogene. Combined with Merck's Keytruda as a treatment for certain types of melanoma, this drug showed impressive efficacy in phase 3 trial results announced early this year ... something else more investors are now aware of.
That being said, August's FDA approval of an updated COVID-19 vaccine, as well as the recent approval of a Moderna-made flu vaccine, are also contributing factors to this year's 700% run-up for the stock, which boosted the company's market cap enough to qualify it for inclusion in the Nasdaq-100.
Should you buy stock in Moderna right now?
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck and Moderna. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
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