At the start of 2020, Novavax was valued at $93m, the sort of level it had bounced around for most of its three decades on the stock market. Today the Maryland-based biotech company has a market capitalisation of $4.1bn.
While most companies are struggling financially this year and a number may not survive, some are prospering. In a series of articles on those fortunate few, the FT is looking at successes in gaming, cloud computing, pharmaceuticals and e-commerce.
We also ranked them. It would have been nice to use profits or sales as the gauge of success. But the lag in reporting and different calendars made that impractical, even for public companies. So we stuck with a market measure, accepting that — in the saying attributed to value investing doyen Benjamin Graham — the market is only a “voting machine” in the short run, rather than a “weighing machine”.
But which market measure? For the main rankings of the top 100, we opted for equity value added. That list included some of the clear “winners” from the pandemic, such as Netflix and Zoom Video. But it has one obvious flaw: it favoured those that were already large. Companies including Nestle, L’Oréal and Alibaba made the cut despite single-digit percentage gains in value.
If we had used percentage gains, the list would have had the opposite problem, favouring smaller companies, penny stocks that can swing wildly on trades of modest value. However, we still wanted to assemble an alternative ranking to highlight some less known but still significant winners. To do this, we used percentage gains but with a $10bn floor for market cap.
This brings into the top 100 companies that escaped the original list such as Ocado, the UK online supermarket that has reinvented itself as a global tech supplier to other grocers, and Peloton, whose stationary bikes equipped with video screens for online classes have surged in popularity as gyms closed. But otherwise the top 100 has a lot of the original big names such as Tesla, Pinduoduo and PayPal.
If the floor is $1bn, there is a lot more shuffling around. On this measure, Novavax comes top, with a 1,900 per cent rise in value. There is little mystery behind this: Novavax has a vaccine candidate for Covid-19 and is racing to expand its manufacturing capacity.
Second comes Alok Industries, an Indian textile manufacturer acquired out of bankruptcy in February by telecoms-to-industrials conglomerate Reliance, which has diverted a factory to producing personal protective equipment for medical workers.
Demand for PPE also takes China’s Intco Medical and Malaysia’s Supermax into the top 10, as they race to produce billions more disposable gloves. Another company that does well is CytoDyn, a US biotech hoping that its existing treatment for HIV can work on Covid-19.
Representing the tech sector is Fastly, a US cloud computing business that provides services to several of the biggest internet winners this year including Shopify, Spotify and Slack. Meanwhile, Etsy, the US-based online store for homemade goods, was boosted by a cottage industry of facemask producers.
Not every company on the list has an obvious coronavirus link. Taiwan’s Oneness Biotech and the UK’s Adaptimmune Therapeutics are both developing potential blockbuster drugs — but for other diseases. Ontario-based Facedrive, a ride-hailing company with a green ethos, only went public last year after being acquired by a cash shell. It is now worth more than $1bn on hopes it will challenge Uber.
Electric van maker Workhorse Group has passed $1bn in market cap despite an annual production target of just 400 vehicles. The company is basking in a dual halo effect — from Tesla and the Trump administration, which is grateful it took on a closing General Motors factory in Ohio.
Are these market surges sustainable? The risk for the older industrial companies is that they are responding to changes in demand that are likely to be temporary: there might end up being a glove glut. For newer technology companies, their products may never live up to the potential seen by investors.
Novavax knows this. It has been in the $1bn club before. In 2015, the market cap hit its previous all-time high of $3.8bn on hopes for a potential vaccine against a different respiratory disease. It failed in late-stage trials a year later and the shares fell 80 per cent. For Novavax and all the companies trying to respond to coronavirus, we can only hope that investors’ faith is justified.
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