The world welcomed the best news of the year during the first week of November when Pfizer announced that its vaccine is ready for the market with 90% efficacy in its early results. But what shook the world was when the CEO sold 62% of his stock on the same day, cashing out $56M post the vaccine announcement. An action of selling the bulk of company stock by a top official never looks good, especially when the market trusts the company as a matter of life or death.
Ideally, when a company announces breakthrough accomplishments, it will reflect in the stock market directly. Despite having credible lab results and logistics planned out, why would the CEO sell his stock before it can mature to a higher value?
Tight competition would be one possible reason.
Post the announcement, many competitor companies also announced their vaccines showing promising results more than Pfizer. Hence Pfizer has slim chances to capitalize on the market when the competitors are playing with competitive pricing in the market.
Pfizer addressed the negative publicity with a statement saying,
"The sale of the shares was a part of CEO's personal financial plans and a pre-established (10b5-1) plan, allowing major shareholders and insiders of exchange-listed corporations to trade a pre-determined number of shares at a pre-determined time.”
Both Pfizer's CEO and EVP sold their shares for $41.94 in the market. The decision to sell their stocks were pre-determined in August 2020 and not planned with the vaccine announced. Looking at how the market performed as the vaccines went public, their decisions seem to be well calculated.
Post the sale, Pfizer was trading at the upper circuit, and stocks were overvalued in the market, showing a sharp decline even though the vaccines were being administered to health professionals during that time.
Even after Pfizer refurbished their test results to 95% efficacy, the share value did not spike. Now the Pfizer trades at $36.44 on NYSE.
Signs of a hyper-competitive vaccine market?
May Be.
