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2 Stocks That Sank Hard on Monday

Motley Fool - Mon Sep 18, 5:49PM CDT

Wall Street has a full week ahead of it, with most investors anticipating the latest interest rate decision from the Federal Reserve due out Wednesday. As a result, trading was relatively quiet on Monday, and the Nasdaq Composite (NASDAQINDEX: ^IXIC), S&P 500 (SNPINDEX: ^GSPC), and Dow Jones Industrial Average (DJINDICES: ^DJI) all posted only minimal gains on the day.

Index

Daily Percentage Change

Daily Point Change

Dow

+0.02%

+6

S&P 500

+0.07%

+3

Nasdaq

+0.01%

+2

Data source: Yahoo! Finance.

Yet there were a couple of big movers among large-cap stocks on Monday, and both of them moved downward. Moderna (NASDAQ: MRNA) and Unity Software (NYSE: U) have both seen their share of struggles recently, and the two stocks moved lower on Monday as more bad news hit their respective companies. Read on to find out the details and what could lie ahead for Moderna and Unity.

Moderna falls on anticipated weak vaccine demand

Moderna was the worst performer in the S&P 500 on Monday, with its stock moving lower by 9%. The COVID-19 vaccine maker struggled as one of its primary rivals announced that it expects to see a tough season ahead.

Pfizer (NYSE: PFE) CFO David Denton spoke at an industry conference and revealed his company's outlook for COVID-19 vaccination rates. The news was bleak, as Denton projected just a 24% vaccination rate in the U.S. in 2023. That's fairly consistent with the estimates that Moderna has made.

Moderna stock had started to climb last week after the U.S. Food and Drug Administration extended its emergency use authorization to new versions of its vaccine that aim at the latest variants of the virus causing COVID-19. Moreover, with hopes of providing combination vaccines to cover both COVID exposure and the flu, Moderna shareholders were finally starting to get more upbeat about the company's prospects.

Long-term investors also believe that Moderna's success with COVID-19 could translate into vaccines and treatments for other diseases down the road. Nevertheless, shorter-term traders are laser-focused on the immediate future for Moderna, and anything that spurs lower vaccine adoption will be a negative in the short run.

Unity makes a mistake

Meanwhile, Unity Software finished down about 8%. The video game software provider has had to deal with backlash from a controversial move, and the potential reversal of that strategic decision could mean that Unity doesn't have as much pricing power as it had originally thought.

Last week, Unity said that it would impose new fees on developers using its platform, with payments tied to the number of game installations from users. The move maddened some of the most ardent supporters of Unity's platform, particularly because competing software providers offer similar features without charging fees like this.

On Monday, however, reports surfaced that Unity could be trying to tone down the changes. The fees wouldn't get eliminated entirely, but they could be subject to limits based on each video game's revenue. Moreover, particularly unpopular provisions like the retroactivity of fee charges and the use of surveillance tools to count installations for verification purposes would be replaced with more palatable alternatives.

Unity is trying to monetize its software more effectively. Yet the danger of alienating key users could prove to do more harm than good. That's a fine line that Unity will have to walk carefully in the weeks and months to come.

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Dan Caplinger has positions in Moderna. The Motley Fool has positions in and recommends Pfizer and Unity Software. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.

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