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The Impact of Pfizer COVID-19 Vaccination on the Stock Market and World



by Sarah M.

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With much anticipation and bated breath, the world has been waiting for a bright light at the end of the COVID-19 pandemic. The announcement of Pfizer (NYSE: PFE) and its German partner BioNTech’s upcoming coronavirus vaccination offers the hope that many have been seeking. The vaccine, called BNT162b2, has been shown to provide more than 90 percent effectiveness at preventing the often fatal virus in volunteers who participated in phase 3 trials.

The efficacy of BNT162b2 is impressive considering the United States Food and Drug Administration (FDA) was expecting a baseline of only 50 percent for the approval of any SARS-CoV2 vaccination. As more data emerges, the efficacy rate of the new Pfizer vaccine may change but despite the uncertainty, the present data and numbers remain encouraging.

Currently, Pfizer is focused on filing an emergency use application later in November with the U.S. FDA and then they will commence the manufacture of 50 million doses for 2020, and for 2021 they will increase production to 1.3 billion. Every person receiving the vaccine will require two shots for effectiveness.

Impact of the COVID-19 Vaccine on the Stock Market

The COVID-19 pandemic has thrust the world economy into a tailspin and the eradication of the virus is needed to shore up the failing economies (especially in the U.S.) With the announcement of the Pfizer vaccine, investors have started to snap up stocks in the hopes that the virus will slow and eventually become controlled. The market starts to become bullish when there is a silver lining on the horizon due to the promise of the potentially successful vaccine.

The hope offered by the SARS-CoV2 vaccine sent the global markets skyrocketing. Investors in Europe started to buy beaten-down stocks such as those in pub chains, retailers, airlines, and various property companies.

With the announcement of the Pfizer vaccine’s efficacy:

  • Rolls Royce which makes jet engines almost doubled and closed 44 percent higher.
  • FTSE 100 index experienced an increase of 4.67 percent (276 points) to 6186 which is a three-month high.
  • The EU-wide Stoxx 600 increased by almost 4 percent which was its highest level since March
  • U.S. stocks attained a record high at the initial start of trading but then dropped back down before close. Initially, the Dow posted at a 2.95 percent gain band the S&P 500 raised 1.2 percent at the close. It was the best day since June with the index gaining 835 points and hitting an intraday record high.
  • Hargreaves Lansdown (an online share and fund dealer) experienced record demand and some customers were even unable to get online to trade as everyone scrambled to take advantage of the impressive gains.
  • Oil prices experienced an upswing of 8 percent.
  • International Airlines Group achieved a gain of 40 percent and ended up settling at 25 percent at the close of the day.
  • Cineworld (the second-largest cinema chain in the world) had a 40 percent gain.

The Varying Effects of the Vaccine Announcement

On the heels of Pfizer’s vaccine announcement, the stock market gainers were predominately companies that have experienced the most impact due to restrictions. Those who have flourished because of the lockdowns underwent a significant setback.

Since the promise of the vaccine offers the hope of a return to normal life, some aspects of the stock market did not do so well when Pfizer made their announcement. The strongly tech-focused Nasdaq fell when the widely popular video conferencing service Zoom lost 17 percent due to the belief that people will eventually be able to stop remote working and will be able to return to the office with in-person meeting and conferences.

Looking at Pfizer’s Stock

After the COVID-19 vaccination announcement, the Pfizer stock increased 8 percent, However, the forecasts for climbing any more remain lukewarm at best. Pfizer has made a deal with the U.S. government to charge $19.50 per dose and the price will probably end up well below that due to the pricing that will occur because of emerging markets. Besides, all vaccines typically have much lower profitability than standard prescription drugs. Also, the vaccine was co-developed with BioNTech so any profits will probably be shared. Overall, the profitability is not there so the Pfizer stock will simply not experience a surge in value.

Increase in Competition

The worldwide competition will mount as more vaccine candidates emerge to share the stage such as Moderna (NASDAQ: MRNA), which is also using an mRNA-based technology that shares similarities with Pfizer. Most experts expect comparable efficacy data.

Required Logistics

Another drawback of the Pfizer vaccine remains logistical. The vaccine requires storage at minus 94 degrees Fahrenheit to remain effective. However, other vaccines that are being announced such as those by Oxford- AstraZeneca, and Novavax do not require the extreme temperatures to remain viable. The refrigeration requirements of the Pfizer vaccine are going to be off-putting for many hospitals and clinics which simply lack the storage capacity needed to maintain the vaccine at the required temperature.

Distribution Timing

Without a doubt, Pfizer’s news has brought a much-welcomed flood of relief, but many are advocating caution because the vaccine is not going to stop unemployment from increasing during the winter months. Also, widespread distribution of the vaccine may not occur until April which means that the winter months will continue to be shadowed by the virus as the number of cases and deaths increases and possible closures to control the spread become a reality. At this point, analysts warn caution. However, the optimism that better days will arrive does create a positive impact on the world market.

Ultimately, as 2020 ends, the market is expected to experience bullishness as healthy gains are achieved in certain sectors like energy, the airlines, and the cruise lines. Even investment banks and credit markets are forecast to rally as 2021 dawns and the reality of the vaccine becomes even more attainable. The positive impacts of the vaccine cannot be denied and the dark months of the COVID pandemic might end which will pave the way for a worldwide economic and financial recovery.

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