Biontech share: This is an alternative to buying the share
Margarethe Honisch / Montage: Business Insider One rule that every shareholder is guaranteed to break is the following: Leave the emotions outside. Money is an emotional issue and even if you know and follow all the important rules and try to act as rationally as possible, the following feelings keep coming up: Fear, greed and sometimes anger at yourself: Why do you have the share just not bought it back then? This is how I feel, for example, with the Biontech share. When I look at my share portfolio, I am extremely satisfied. For the most part, I’ve had a good hand with my stocks and ETFs. Still, when I hear the news about Biontech, I hear the “D’oh” from Homer inside – no, not the Greek poet, but Homer Simpson. Well, why didn’t I buy the shares at the time, even though the company was already so present in the media shortly after its IPO that only love brands like Tesla, Apple or Disney are? You have to know that choosing the right stocks is not a science, but a fine art. In science alone there are different points of view as to which type of stock analysis is the right one to discuss whether a stock will rise – or not.
Stock analysis: fundamental or technical?
The future is not traded on the stock market – and we all know how unreliable the weather forecast for tomorrow can sometimes be. If it were as simple as some stock market letters sometimes claim – by introducing you to ten stocks with a “guaranteed 300 percent profit” for a three-digit amount – we would have a few more millionaires in the country. The two most popular types of analysis are fundamental analysis and technical analysis. You may know fundamental analysis from multibillionaire Warren Buffett. His favorite reading is company balance sheets. He analyzes this and compares it with the company’s current share price. One tries to find out which share is undervalued from corresponding key figures such as the price / earnings ratio, the price / book value ratio or earnings growth. These stocks are called value stocks and it is assumed that the broader market has simply not yet checked how valuable the company is and that the stock price will adjust to the company value in the future. When the stock market is good, many investors ignore this approach because everything is going well anyway. In bad times, the theories of the founder of value investing Benjamin Graham are extremely interesting again. In contrast to fundamental analysis, there is technical chart analysis. If you were previously unfamiliar with Graham, you probably know the founder of this theory: Charles Dow. His name appears every evening on the daily news when the Dow Jones Index reports, the US equivalent of the DAX. (For show-off knowledge: The other guy was called Edward Jones, a statistician and co-founder of the Wall Street Journal.) In any case, chart analysis focuses on the course of the chart, i.e. the course of the share price, since one assumes that history repeats itself and that Market participants always act in the same way. To do this, one uses trends, indicators and formations and tries to predict the future chart development from the previous chart history. What once started with mathematical formulas is now so mature that so-called neural networks in trading systems want to imitate and predict human behavior.
Art or science?
So we now have two basic theories that differ from one another: fundamental theory and chart analysis. If you are getting share tips and recommendations for a share from someone, you have to know: on what basis does this evaluation take place? The same applies if you want to buy and analyze stocks yourself: Which theory do you want to apply? Or do you even work with both theories? Personally, I am of the opinion that both approaches have their right to exist, even if there are representatives here who appeal very emotionally for or against one of the two theories. As in art, however, there is no right or wrong here. Like most private investors, I had Biontech on my radar for the first time in March 2020: There is a global pandemic and there is a vaccine manufacturer who says: “Wait a minute, we could solve the problem.” every shareholder with their ears. The problem, however, was that there were several players on the market and it was not yet possible to assess who would win the race: CureVac, Moderna, Johnson & Johnson or Pfizer with Biontech. Whether fundamental analysis or chart analysis – there is no point in investing in a biotech company if the most important factor is still missing: the effectiveness of new drugs in clinical studies. In mid-March 2020, the Biontech share shot up 46 percent and stood at around 50 euros before collapsing again just as quickly. Looking back, you can see very well how the stock has pulled itself up again after each price slump and repeatedly achieved new all-time highs.
Hope or remain skeptical?
In the meantime, the success of the studies has been proven and the vaccine is the secret favorite of all those willing to vaccinate. Everyone who has been vaccinated with Biontech knows the envious looks or the benevolent nod when asked about the vaccine. In July of this year alone, the share gained almost 45 percent and has more than tripled since the beginning of the year. In 2019, Biontech had a turnover of 109 million euros and a loss of 179 million euros. So the only thing that drove investors was hoping for the vaccine. I remained skeptical. In 2020 the company achieved a turnover of 482 million euros and made over 15 million euros in profit. In the second quarter of 2021 alone, sales were over 5 billion euros and a profit of over 2 billion euros. The numbers look more than good. Compared to the current share price, one would say the share is overvalued. But it has been known at least since Tesla that most private investors don’t really care. The further development of Biontech does not only depend on Corona. Because what happens after Corona? And hopefully there will be a post-corona and no co-corona. Of course, the question also arises as to whether we will have to be vaccinated annually for flu like older people in the future. But Biontech has two other aces up its sleeve: the development of drugs against cancer and malaria.
The drunken man’s walk
I didn’t buy Biontech back then because in the end I believed in a third stock market theory: the random walk theory. This says that the price development is completely unpredictable because it depends on so many factors. The random walk is based on the idea that you are watching a drunk and trying to predict in which direction this person is walking or staggering. So the probability that a stock price will rise at any given time is exactly the same as the probability that it will fall or move sideways. Just like with a drunk. In view of the figures at the time, the current situation and the situational uncertainty, I did not buy the share. However, I have opted for a broadly diversified biotech ETF. I didn’t have a sixfold profit, but at least I achieved a plus of around 25 percent within one year. Sometimes you just have to be satisfied and forget about greed. Margarethe Honisch is a financial blogger and book author. On her website Fortunalista and her Instagram account of the same name, she gives tips about retirement planning and investing. For Business Insider she writes the column “Make more out of money”.