Is Novavax (NVAX) making money?

No stock is growing or shrinking faster than Novavax (NVAX). Novavax’s share price began 2020 at $4.49 on 2 January and rose to $142.87 on 20 August 2020 but fell to $119.26 on 24 August 2020.

Incredibly, Novavax Inc. (NASDAQ: NVAX) hit a high share price of $178.51 on 10 August 2020. Mr. Market loves Novavax because of claims its’ NVX-CoV2373 vaccine could increase coronavirus immunity in macaques.

Perversely, there is no evidence NVX-CoV2373 helps humans fight COVID-19. To elaborate, macaques are a species of monkey. Thus, Novavax does not have a coronavirus vaccine. Instead, Novavax has a vaccine that could prevent coronavirus in monkeys.

Does Novavax have a Coronavirus Vaccine?

However, Novavax (NASDAQ: NVAX) is a conducting an observer-blinded, placebo-controlled efficacy study, or Phase 2b trial, of NVX-CoV2373 in South Africa. In detail, Novavax is testing the vaccine in 2,665 healthy volunteers. Novavax also plans to test NVX-CoV2373 in 240 medically stable AIDS patients, (HIV-positive adults).

The Bill & Melinda Gates Foundation gave Novavax a $15 million grant to fund the South African tests, Yahoo! Finance claims. NVX-CoV2373 mimics a key protein in the  SARS-CoV-2 virus. Novavax’s hope is that the mimicked protein will simulate infection, which tricks the body into producing antibodies that can fight coronavirus.

Novavax held a small NVX-CoV2373 test in Australia that showed promising results, Stat News claims. So Novavax does not have a coronavirus vaccine. Instead, Novavax is testing a possible coronavirus vaccine.

Is Novavax Making Money?

Novavax (NVAX) experienced incredible revenue growth. In fact, Stockrow estimates Novavax’s revenues grew at a rate of 958.62% in 2nd Quarter 2020.

That revenue growth sounds impressive until you examine Novavax’s financial numbers. Novavax reported revenues of $3.38 million on 31 March 2020. Those revenues grew to $35.54 million on 30 June 2020.

That revenue growth sounds impressive until you examine Novavax’s financial numbers. Novavax reported revenues of $3.38 million on 31 March 2020. Those revenues grew to $35.54 million on 30 June 2020.

Furthermore, Novavax reported a quarterly common net loss of -$17.52 million on 30 June 2020. The quarterly common net loss fell from $31.83 million on 31 December 2019 and -$25.86 million on 31 March 2020.

However, Novax’s quarterly gross profit grew from $3.38 million on 31 March 2020 to $35.54 million on 30 June 2020. Thus, Novavax makes no money. In fact, Stockrow credits Novavax with five straight quarters of operating losses.

Is Novavax generating cash?

On the positive side, Novavax reported its first positive operating cash flow on 30 June 2020. Novavax (NASDAQ: NVAX) reported a negative operating cash flow of -$23.11 million on 31 March 2020 that grew to $115.63 million on 30 June 2020.

Novavax’s quarterly ending cash flow grew from $6.25 million on 31 December 2019 to $187.19 million on 31 March 2020 to $344.38 million on 30 June 2020. Unfortunately, most of that cash comes from financing.

Novavax reported a $30.17 million quarterly financing cash flow on 31 December 2019 that grew to $185.92 million on 31 March 2020 and $419.62 million on 30 June 2020. Hence, Novavax’s ability to make money has not increased. Instead, Novavax’s capacity for borrowing money and amassing a mountain of debt is growing.

Why Novavax could Collapse into Bankruptcy

Thus, Novavax could be a significant investment if the NVX-CoV2373 vaccine works. If NVX-CoV2373 fails, I think Novavax will collapse into bankruptcy. To explain, the current hope at Novavax is that governments and wealthy philanthropists; such as Bill Gates will pay big bucks for its vaccine. No vaccine, no money.

I think Novavax could collapse fast because it reported $609.06 million in cash and short-term investments on 30 June 2020. However, the cash and short-term investments grew from $244.25 million on 31 March 2020 and $81.77 million on 31 December 2020. Problematically, that cash and short-term investments comes from borrowing, not selling vaccine.

Interestingly, Novavax’s total assets grew from $172.96 million on 31 December 2020 to $328.07 million on 31 March 2020 to $932.23 million on 30 June 2020. Thus, Novavax’s value is increasing?

What is Novavax?

Novavax Inc. (NASDAQ: NVAX) develops vaccines for pandemic diseases. For example, Novavax is developing vaccines for seasonal influenza, Respiratory Syncytial Virus (RSV), Ebola, Middle East Respiratory Syndrome (MERS), and Severe Acute Respiratory Syndrome (SARS).

Anybody who reads the news knows that pandemics are an enormous problem that can disrupt the entire world. Hence, the coronavirus pandemic are validating Novavax’s business model. Conversely, there is no evidence, Novavax’s vaccines work.

For example, the world has experienced 23.758 million coronavirus cases and 815,337 deaths since November 2019, Worldometers estimated on 24 August 2020. Frighteningly, Worldometers estimates the United States detected over  36,035 new coronavirus cases on 24 August 2020. Moreover, Worldometers estimates 180,966 Americans havd died from COVID-19 on 24 August 2020.

Novavax (NVAX) is a pure speculative investment

Therefore, Novavax could have a product with an enormous market. In addition, Novavax could fill an enormous need.

However, I think Novavax (NVAX) is a pure speculative investment that has no value. Therefore, investors need to avoid Novavax until it demonstrates a working vaccine that can be mass manufactured. In the final analysis, I consider Novavax a gamble that could never pay off.