What A Vaccine Means For Stocks

There is no overstating the importance of yesterday’s news.  No, not McDonald’s planned launch of a crispy chicken sandwich.

Of course we are talking about Pfizer and BioNTech’s announcement of preliminary data for their COVID-19 vaccine, which sparked a banner day for the stock market.

Jab Details

The vaccine candidate (known as BNT162b2) uses a novel, gene-based technology called mRNA (messenger RNA). 

Unlike traditional vaccines that use weakened or inactivated versions of an entire virus, the mRNA technology provides instructions for cells to start producing the “spike” protein that juts from the surface of the SARS-CoV-2 virus. 

On its own, the spike protein isn’t harmful, but it can trigger a defensive immune response.

Hard Data: After just 94 COVID-19 cases among the nearly 40,000 fully-enrolled participants, Pfizer and BioNTech determined the vaccine reduced a patients’ chances of contracting symptomatic disease by 90%.  To put that in perspective:

  • For months, scientists have cautioned a vaccine might prove only 60% or 70% effective in a “good” outcome.
  • The FDA sets a 50% efficacy threshold in placebo-controlled studies.
  • In the 2018-19 influenza season, the flu shot was only 29% effective.

What About Safety? No serious side effects were reported, but data is still being collected.

What Else? The companies said they are on pace to collect two months of safety data by the third week of November, with submission to the FDA for emergency authorization shortly thereafter.  They expect to have 50 million vaccine doses available in 2020 and up to 1.3 billion doses in 2021.

The Market Response

The markets reacted strongly to the vaccine news, but the specifics were nuanced.

So-called “value stocks,” and those which have been crushed under the weight of social distancing requirements, had breakout days:

  • Planet Fitness shares rose 17% on hopes of people getting back to the judgement-free zone. 
  • Even AMC Entertainment soared over 50% with an end to the 2020 horror show on the horizon.

“Stay-at-home” stocks, on the other hand, were taken to the cleaners. 

  • Zoom fell over 17% despite having become a verb. 
  • Peloton fell 16% on the prospect of IRL spin classes returning.  
The Takeaway

All-in-all, even the most guarded scientists were cautiously optimistic about the news.

Not to be outdone, Russia announced yesterday its vaccine is “also 90% effective.”