FDA Grants Pfizer, BioNTech Full Approval for Their COVID-19 Vaccine

Full Approval Should Drive More Shots

Pfizer (PFE) and BioNTech’s (BNTX) COVID-19 vaccine received full approval from the Food and Drug Administration Monday for people 16 and older. The vaccine, which the company will now market under the name Comirnaty, only had Emergency Use Authorization prior to Monday. Pfizer and BioNTech applied for full approval in May.

The COVID-19 shot is the first to win full approval in the US. News sent shares of Pfizer and BioNTech higher as investors analyzed what that could mean for sales. After all, full approval by the FDA is expected to sway more people to get inoculated.

Companies Mandate Vaccinations

In addition to convincing more Americans it is safe to receive the COVID-19 vaccine, the approval by the FDA is expected to prompt more companies to require workers to be vaccinated. Large companies including Walmart (WMT) and Walt Disney (DIS) are already requiring some or all of their employees to be vaccinated. Meanwhile the Pentagon is requiring the vaccine next month and could move up the deadline now that the FDA gave it full approval.

Chevron (CVX), the second-largest oil company in the country, also started requiring employees to get the vaccination as infections in the industry begin to rise. COVID-19 cases are impacting operations in the Gulf of Mexico, the Permian Basin of Texas, and New Mexico—key offshore platform sites for Chevron.

Pfizer Can Market Directly

With full approval Pfizer and BioNTech can market the vaccine directly to doctors, insurance companies, and consumers. Pfizer, which generated $7.8 billion in COVID-19 sales in the second quarter alone, could also charge more for the vaccine. After submitting 340,000 pages as part of the months-long process, the approval was cheered by Wall Street on the first day of the week. The Dow Jones Industrial Average rallied nearly 300 points and specific sectors like travel and leisure advanced. This broad-based bump sent names like Delta (DAL), American Airlines (AAL), Carnival (CCL), and Norwegian Cruise Lines (NCLH) higher. Investors will be waiting to see if approval will be enough to convince more Americans to get a shot and what it means for the companies’ bottom lines.

Tackling Credit Card Debt

Watch a replay of our recent chat with SoFi member, Ryan Masajo, about his financial journey toward being debt free and achieving financial independence.

Watch on Twitter now!

Despite Demand, Wind Turbine Makers Struggle

Profitability Eludes Wind Turbine Makers

General Electric (GE), Siemens Gamesa Renewable Energy (GCTAY), and Vestas Wind Systems (VWDRY) are pouring billions of dollars into manufacturing wind turbines, but the efforts are not translating into the profits they hoped for—even with outsized demand for green energy. Both Siemens Gamesa and Vesta Winds, the two biggest global wind turbine manufacturers, cut their profit targets for the rest of 2021. Meanwhile GE, which showed annual growth in turbine sales, has not been able to achieve profitability in that unit.

The main culprits for their woes are rising raw materials and shipping costs, which are eating away at their margins. It also doesn’t help that the fate of US subsidies is constantly up in the air, which leads to uncertainty, and causes some investors to feel skittish.

Demand Surges But Profit Limited by Costs

The headwinds the wind turbine industry is facing come as demand for their products and services explodes around the globe. Orders for wind turbines this decade are projected to be two times what they were in the previous 10 years. Nonetheless, the sheer size of wind turbines is making manufacturing difficult and costly. Add skyrocketing transportation and rising prices for steel, aluminum, carbon fiber, and copper to the mix, and it is not surprising profitability eludes these players. The cost to produce a wind turbine is expected to jump 10% in the next two years as a result of all the moving parts.

While price increases for raw materials could persist for some time, the companies are optimistic that shipping costs will decline as COVID-19-related bottlenecks are ironed out. But they do acknowledge that as the turbines get larger, transporting them will become even more complex.

Industry Looks to US Subsidies

Also hurting the manufacturers’ path to profitability is the state of US subsidies. A federal tax credit on wind turbines is slated to expire this year, and it is not clear if the White House will extend it or what an extension would entail. The topic is making the rounds as part of the Democrats’ $3.5 trillion budget-reconciliation bill. A lack of clarity is prompting some customers to postpone ordering new turbines as they see what happens on the legislative front.

All the near-term pain for wind turbines has weighed on the share prices. Siemens Gamesa’s stock is down about 25% this year. However, that is not stopping the company from expressing optimism about the long-term future. It points to a world that is moving toward greener energy, with wind being a major driver. It will be interesting to see how long it takes for these wind turbine leaders to generate a profit.

Race to Space Heats Up: Virgin Orbit to Go Public

Virgin Orbit Inks SPAC Deal

Virgin Orbit, the satellite-launch startup owned by mogul Richard Branson, is going public via a SPAC deal. The transaction with NextGen Acquisition Corp. II (NGCA) values Virgin Orbit at $3.2 billion. Boeing (BA) and private equity firm AE Industrial Partners are participating in the deal via a $100 million “private investment in a public equity” transaction, also known as a PIPE.

The listing of Virgin Orbit later this year comes as investor interest in space is climbing. As the cost to send people to space declines, investors are betting it will usher in an entirely new industry, generating billions of dollars. Virgin Group owns 80% of Virgin Orbit, which is one of the leaders in launching small satellites to space. Firefly and Rocket Labs are also in the race.

Boeing Looks to Beef Up

Boeing’s investment comes as the company has been struggling with its own space program. Faulty valves on its Starliner spacecraft delayed an August test launch. This pushed back its original goal of sending a manned spacecraft to the International Space Station. The aircraft manufacturer sees the investment in Virgin Orbit as a strategic way to get more exposure to the growing industry. It is already an investor in Virgin Galactic (SPCE), Bronson’s spaceship company.

Virgin Orbit is among a handful of satellite startups to successfully complete launches, proving its technology works. The satellite company is expected to earn $483 million from the deal. Once the merger closes Virgin Orbit will trade on the Nasdaq under (VORB).

Noteworthy Pipeline

Virgin Orbit was spun out of Virgin Galactic in 2017 and delivered its first payload to space in January, bringing 10 satellites to orbit for NASA. It also landed a $35 million deal with the US Space Force last year to supply launches to the US military. SPAC deals have been an increasingly popular way for startups or privately held companies to go public. Blank check companies sometimes focus on more budding investment opportunities including space and autonomous driving.

According to public filings posted yesterday, Virgin Orbit has roughly $300 million worth of contracts in the pipeline. Moreover, the company is projecting to generate more than $2 billion in sales annually by 2026. Investors will be closely watching how this company fits into the growing space sector.