When you think of Moderna, you’re probably thinking of one thing: the Covid-19 vaccine.

But since the peak of the pandemic and the global mass vaccination effort, the pharmaceutical company has struggled to maintain its market share. It has been investing its Covid windfall into research into potentially groundbreaking new drugs—an ambitious bet that so far hasn’t been paying off.

Now, the company is reducing its spending—big time. In a Thursday press release, Moderna announced that it is going to cut over $1 billion in research & development expenses by 2027, including cutting a slew of planned clinical trials.

Moderna also said it is narrowing down its drug pipeline to focus on ten key product approvals in the next four years, including three viral vaccines it moved into the final stage of clinical trials back in March.

"The size of our late-stage pipeline combined with the challenge of launching products means we must now focus on delivering these 10 products to patients, slow down the pace of new R&D investment, and build our commercial business,” explained CEO Stéphane Bancel in a statement today.

Moderna’s treatment plan

While Moderna’s plan to tighten its belt and focus on effective—and hopefully lucrative—drugs is essentially what investors have been asking for, shareholders weren’t heartened by Thursday’s proposal. Instead, they saw it as a confirmation of how dire the company’s current financial situation really is.

Shares plummeted 12.36% today on the news, and are now down over 38% year-to-date.

Even worse: The $1 billion in cuts won’t even be felt until 2027, wrote Jefferies analyst Michael Yee in a note today.

“While there will be some R&D cost cuts starting in 2026, the bulk of it (ie the $1.1B in total R&D cuts) is not until 2027,” wrote Yee, adding that Moderna’s expected path to profitability is now delayed about two years beyond his prior assertion that the company would be making money in 2026.

“The company believes they have sufficient cash to fund their plans to break even without raising additional equity, however, we believe this will remain a significant debate, and investors are unlikely to believe this until further credibility,” he wrote.

That said, he still has a “buy” rating on the stock and a price target of $120, over double what shares trade today.—LB

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🟢 What’s up

• Roku rose 5.67% thanks to an analyst upgrade by Wolfe Research, pushing the streaming platform from hold to buy based on its focus on profitability.
• Signet Jewelers gained 11.26% in spite of missing on revenue forecasts. But shareholders were encouraged to see stronger same store sales, solid earnings, and signs that the engagement ring industry is improving.
• Kroger popped 7.14% after the supermarket stock missed top and bottom line estimates this quarter, but then adjusted its earnings per share to make them look better.
• Petco Health & Wellness added another 11.27% on top of yesterday’s post-earnings surge after getting a shout-out from meme stock royalty Roaring Kitty.
• Warner Bros. Discovery jumped 10.37% thanks to a new deal with Charter Communications, whose stock also rose 3.55% on the news.

What’s down

• Micron Technology dropped 3.79% after a double-whammy of analyst downgrades from Raymond James and BNP Paribas citing its slowing growth.
• Sirius XM Holdings sank another 9.86% after yesterday's news that the company will merge with Liberty Sirius XM Group, offer a 10-for-1 stock split, and buy back about $1.2 billion in shares (phew, that’s a busy day).
• US Bancorp slid 1.95% after announcing a share buyback program of up to $5 billion, which is usually a good thing.

If you’ve felt like this year has been a volatile one for markets, now you’ve got proof.

As Charlie Bilello of Creative Planning (an excellent data viz newsletter) notes in the post above, Nvidia’s wild ride yesterday isn’t even the biggest move the stock has made this year.

The semiconductor powerhouse popped nearly 8% after CEO Jenson Huang noted that demand for its Blackwell chips is “incredible,” adding $216 billion to the company’s market cap. But as you can see above, that’s still peanuts compared to some of Nvidia’s single-day gains in 2024.

Of course, as astute readers will tell you, volatility knows no direction. The big swings higher for some of the largest companies on the market are only matched by their dramatic declines, with eight of the 10 top market cap drops in history coming this year alone.

With rate cuts and a presidential election looming, it seems unlikely that the market roller coaster will come to full and complete stop anytime soon.

Trying to predict how the stock market will move is an age-old conundrum, and an endeavor that rarely proves fruitful long-term. You’d think that Wall Street analysts would have a better idea than the rest of us.

But they’re not infallible. Wall Street equity researchers have been caught a step behind when it comes to economic meltdowns in the past. According to one strategist who spoke to MarketWatch, analysts can be as much as 30% too bullish during peaks preceding economic crashes.

Now, some investors are questioning whether equity analysts’ lofty forecasts for 2025 are painting too rosy a picture of the economy right now—especially when economic data is flashing warning signs about a larger slowdown as the Fed gears up for rate cuts.

Let’s get real

Overall, Wall Street is projecting huge corporate earnings growth over the next year, signaling their optimism about the economy. After all, it’s difficult for companies to make money in a recession.

Analysts predict that S&P 500 earnings will rise over 15% by the end of 2025—above their original projections of 12.8% at the beginning of this year, and far faster than 2024’s projected earnings growth of about 11%.

At the same time as Wall Street is raising hopes of strong growth next year, the Federal Reserve is digesting a slew of less-than-stellar economic reports. The labor market is slowing down, inflation is decelerating but still sticky, and US manufacturing numbers are lower than economists anticipated.

The Fed is expected to start cutting interest rates next week. But the size of the rate cut, and the pace on the way down, is still unclear. And as consumers continue to face inflationary pressures, corporate profits could take a hit.

Wall Street says the economy will keep growing, and so will earnings. The Federal Reserve says the economy is slowing. Who’s right?

Rather than try to time the market or bet on it heading in one direction or another, experts advise investors to take some of the most rosy analyses with a grain of salt, and stay diversified across stocks and fixed income.—LB

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• OpenAI, the maker of ChatGPT, is valuable. But now we’ve got a price tag from private equity firms for the company that catalyzed the AI arms race: $150 billion.
• The labor market is holding steady, with initial jobless claims rising from 228,000 last week to just 230,000 today. But continuing claims keep rising, indicating it’s harder for unemployed workers to find new jobs quickly.
• PPI, a measure of wholesale inflation, increased 1.7% annually—that’s down from 2.1% last month, and the lowest level in six months.
• Young Wall Street investment bankers are famously overworked, but thankfully they’ll now be limited to a mere 80 hours a week. Phew, what a relief.
• China’s economic problems are becoming problems for American companies.
• Where should you invest $100,000 right now?

Tomorrow brings us the University of Michigan’s September Survey of Consumers. As the name implies, the survey analyzes consumer sentiment, and while it won’t play a role in determining the Fed’s next move when it comes to interest rates, it can still be a helpful barometer of how the economy is faring.

Quarterly reports are few and far between these days, and there’s nothing major looming on the earnings front—maybe they’re all just trying to avoid announcing earnings on Friday the 13th.