Buying the hype: why Moderna in 2021 was a terrible investment

​​​The rise and fall of pandemic darling Moderna

​In 2021, Moderna was the poster child of pandemic-era euphoria. Riding the success of its Covid-19 vaccine, the company saw its stock price rocket from under $20.00 pre-pandemic to nearly $500.00 at its peak. The financial media couldn't get enough of the success story.

​But beneath the headlines and hero worship, one thing was painfully clear to disciplined investors: buying Moderna at those levels wasn't investing—it was speculation in its purest form. The warning signs were there for anyone willing to look beyond the excitement.

​Fast forward to today, and Moderna's shares have collapsed by over 80% from their highs. That's not a correction or a temporary setback—it's a devastating blow to anyone who bought into the hype without considering the fundamentals.

​The Moderna saga serves as a perfect case study in why valuation matters, why single-product companies carry enormous risks, and why emotional investing based on headlines rather than analysis leads to painful losses.

​One product, one moment in time

​Moderna's entire valuation hinged on a single product - its Covid-19 vaccine - sold into a one-time, emergency global market. This wasn't a diversified pharmaceutical giant like GlaxoSmithKline (GSK) or AstraZeneca. It was a crisis play masquerading as a long-term investment opportunity.

​When that crisis began to ease, demand for boosters plummeted dramatically. Government contracts that had provided billions in guaranteed revenue started drying up. The pipeline that investors hoped would deliver the next breakthrough hadn't yet produced anything commercially viable to fall back on.

​Investors betting on perpetual pandemic demand ignored the obvious reality: lightning rarely strikes twice in the same place. The Covid-19 vaccine market was always going to be temporary, and competition from established pharmaceutical companies was inevitable.

​The company's over-reliance on a single revenue stream should have been a massive red flag. Successful long-term investments typically involve companies with diversified product portfolios, multiple revenue streams, and proven ability to innovate consistently over time. This is why investing for beginners guides always emphasise the importance of diversification.

​Sky-high valuation with a thin foundation

​At its peak, Moderna traded at over 35 times sales and more than 100 times earnings - absolutely absurd multiples for a single-product biotech company. The market was pricing it like a high-growth technology platform with recurring revenues, not a vaccine developer dependent on one product.

​This wasn't Apple with its ecosystem of products and services. This wasn't Nvidia with its dominance in multiple chip markets. It was a biotech firm with extremely limited visibility beyond one exceptional year of vaccine sales.

​Chasing that kind of valuation without recurring product diversity represents a textbook example of what not to do when selecting investments. Even the most optimistic projections couldn't justify those price levels based on any reasonable assessment of future cash flows.

​The lesson here is fundamental: valuation always matters, regardless of how exciting the story sounds. When you pay 100 times earnings for any company, you're essentially betting that everything will go perfectly for many years to come. History shows us that such bets rarely work out well for investors who buy shares at inflated prices.

​The market priced in a future it couldn't deliver

​Bullish investors and analysts assumed Moderna's mRNA technology platform would quickly produce breakthrough treatments for cancer, RSV, flu, and numerous other conditions. The narrative was compelling: revolutionary technology that could be adapted to treat almost any disease.

​But experienced biotech investors know that drug development takes years, costs billions, and has an extremely high failure rate. The probability of clinical success is notoriously low, even for promising technologies. Most experimental treatments never make it to market.

​As of 2025, those ambitious promises remain largely unfulfilled. Meanwhile, Moderna has posted billions in losses as vaccine revenues declined and development costs mounted. The company's cash position has deteriorated significantly from its pandemic-era peaks.

​The harsh reality is that even revolutionary technology platforms need time, money, and luck to translate into commercial success. Investors who bought into the hype failed to account for the considerable execution risk involved in drug development. Understanding these risks is crucial for anyone learning how to invest in stocks in the pharmaceutical sector.

​The devastating aftermath for investors

​Moderna's stock is now down over 80% from its 2021 highs. For context, that means investors who bought £10,000.00 worth of shares at the peak would now be sitting on just £2,000.00. That's not a temporary pullback—it's a wealth-destroying collapse.

​Long-term holders who bought into the pandemic euphoria are left with massive unrealised losses and a sobering lesson about the dangers of momentum investing. Many retail investors who had never previously shown interest in biotech stocks suddenly became convinced they could spot the next big winner.

​The psychological damage from such losses often extends far beyond the immediate financial impact. Many investors become gun-shy about the stock market entirely, missing out on legitimate opportunities because of one catastrophic experience with a hyped stock.

​This pattern repeats throughout market history. Whether it's dot-com stocks in 2000, housing-related investments in 2008, or pandemic winners in 2021, the script remains the same: euphoria leads to overvaluation, reality sets in, and late buyers suffer devastating losses.

​Basic valuation metrics could have saved investors

​Simple valuation tools can help investors avoid expensive mistakes like Moderna. The price-to-book ratio, which compares a company's market value to its book value, provides crucial insight into whether shares are reasonably priced or dangerously overvalued.

​Looking at Moderna's price-to-book ratio throughout its spectacular rise and fall tells the story clearly. In early 2019, the ratio sat around reasonable levels of 1.8-4.0. But as pandemic euphoria took hold, this metric exploded to over 25 times book value by late 2021.

​At its peak in September 2021, Moderna traded at nearly 26 times book value while the share price hit $450.00. This extreme valuation should have been a flashing red warning sign. Companies rarely sustain such elevated multiples without exceptional and recurring business fundamentals.

​The subsequent collapse saw both the share price and valuation metrics return to more reasonable levels. By 2025, the price-to-book ratio had fallen back to around 1.0-1.5, indicating the market had finally re-evaluated the company's true worth based on its actual assets and prospects.

Moderna chart

​Valuation discipline prevents costly mistakes

​The Moderna disaster wasn't wrong because it was a bad company with terrible technology. The Covid-19 vaccine was genuinely life-saving and represented a remarkable scientific achievement. The investment was wrong because it was an expensive company priced for an exceptional moment it couldn't repeat.

​When fundamentals eventually caught up with the inflated expectations, the story fell apart quickly. Revenue declined, losses mounted, and the stock price collapsed back toward levels that reflected the company's actual prospects rather than pandemic-era dreams.

​This is why valuation discipline is so crucial for long-term investment success. No matter how exciting a company's technology or how compelling its growth story, paying too much virtually guarantees poor returns. Even great companies can be terrible investments at the wrong price.

​Professional investors understand this principle instinctively. They might love a company's prospects but wait for a reasonable entry point rather than chasing momentum. This patience often means missing some exciting moves higher, but it also prevents the devastating losses that come from buying at peaks.

​Learning from expensive mistakes

​The key lessons from Moderna's collapse extend far beyond one biotech stock. They represent fundamental principles that apply to all investment decisions, whether you're buying individual shares or building a diversified portfolio through index funds.

​First, single-product companies carry enormous concentration risk, regardless of how revolutionary their technology appears. Diversification isn't just about owning multiple stocks - it's about ensuring your investments aren't all dependent on the same narrow set of circumstances.

​Second, valuation always matters, even for companies with genuine competitive advantages. Paying reasonable prices for good companies consistently produces better long-term results than paying any price for great companies.

​Third, emotional investing based on headlines and hype rarely works out well. The most compelling investment stories often coincide with the worst entry points, because widespread excitement tends to drive prices to unsustainable levels.

​How to invest in quality shares responsibly

​Rather than chasing the next Moderna, here's a more sensible approach to building wealth through equity investing:

1. ​Research companies with diversified revenue streams and proven business models rather than single-product plays dependent on extraordinary circumstances
2. ​Open a share dealing account or use our investment app to access quality companies at reasonable valuations
3. ​Focus on businesses with sustainable competitive advantages and predictable cash flows that can compound over time
4. ​Consider your risk tolerance and investment timeline before committing capital to any individual stock
5. ​Build a diversified portfolio that can weather sector-specific downturns and avoid concentration risk

​Remember, hype is not a strategy, and valuation always matters. The most boring approach to investing often produces the most exciting long-term results, while chasing excitement typically leads to disappointing outcomes.