Shares of biotechnology companies are increasingly popular among investors
The demand for shares of biotechnological companies is growing in the U.S. and the volume of IPO in this industry has reached its maximum. Last year, the U.S. stock exchanges held placements of securities for a total of $9.4 billion. Prior to that, the record volume of IPO was 6.5 billion dollars, which was recorded in 2018.
Shares in the sphere of biotechnology continue to increase in price. Last year, they increased by 34% on the first day of trading. This dynamic is the best result since 2000, when there was a technological boom.
Interest in these companies is reflected on stock exchanges. The Nasdaq Biotechnology index increased by 13%, while the S&P 500 increased by 3.7%.
Experts point out several reasons for the increased interest in the segment of biotechnology. This is primarily due to the development of a vaccine against COVID-19. Investors are actively buying securities in the hope of generating large income. The demand for these shares is also growing because governments continue to increase investments in the industry and develop technologies.
In their turn, companies take advantage of increased cash flows and continue to place papers. Over the past year, the volume of additional placements at the exchange amounted to 32 billion dollars, which was a record figure for the market.
However, not all experts are optimistic about the development of biotechnology companies. The fact is that their shares have a risk of volatility, as their pricing is influenced by whether the business was successful or the product was a failure.
In addition, interest in companies that are developing a coronavirus vaccine may be short-term and unreasonably inflated. For example, many investors have exaggerated expectations about Moderna Inc, where the third stage of vaccine testing is currently underway. The U.S. National Institute for Allergy and Infectious Diseases has been involved in its development. The development of the serum has increased investor interest in Moderna Inc. While at the beginning of last year its capital was $7 billion, by the end of the period it was about $30 billion.
In addition to Moderna Inc., investors are paying more and more attention to CureVac BV. The latter company is also developing a vaccine against coronavirus. In the near future plans – to carry out an IPO on the stock exchange in New York, experts estimate the company at about 1 billion dollars.
Shares continue to rise in price, and this trend will continue for some time. However, it is also possible that the securities will collapse if investors switch their attention to other segments.