Why Is NVAX Stock Surging Today?

• Shah Capital disclosed a 9.11% stake in Novavax and plans to vote against the board.
• The activist has been pushing Novavax to pursue strategic changes, including a potential sale, citing "persistent underperformance."
• Retail sentiment surrounding the stock has been ‘Bearish’ with ‘Normal’ message volumes.

Shares of Novavax Inc. (NVAX) jumped over 6% premarket on Wednesday after activist investor Shah Capital announced its plan to vote against board nominees and executive compensation at the company’s upcoming annual meeting.

​Shah Capital, now the second-largest shareholder of the vaccine company, disclosed that it has increased its stake from 9% to 9.11%. In a letter, Shah Capital founder Himanshu Shah accused the board of "persistent underperformance, Nuvoxovid's rollout slipups, timid/ineffective marketing, extremely poor capital market actions, and tremendous lack of accountability."

Shah Capital also stated that management has failed to implement aggressive cost-cutting measures and urged leadership to reduce costs and to strategically buy back 10 million to 20 million shares.

Demanding Management Change

Shah demanded a 30% reduction in the senior management team, reducing the board strength from eight to five. The firm also demanded a long-term strategic investor to own a 10% to 20% stake to reshape the vaccine maker, according to the report. 

Shah also said that the partnership with Sanofi has not benefited Novavax. He expressed dissatisfaction with the delays in the launch of late-stage results for the COVID/influenza combo vaccine, a market worth almost $5 billion.

Citing “persistence underperformance”, Shah has been pushing Novavax for strategic changes, including a potential sale. He said that if no changes were made, he would start a proxy fight. However, he also said he is unwilling to follow this route, as it would put him in the minority on the eight-member board. 

Shah Capital also asked proxy advisory firms ISS and Glass Lewis to review their recommendations supporting the company’s proposals.

How Did Retail Traders React?

On Stocktwits, ​retail sentiment surrounding the stock has remained ‘Bearish’ while message volumes stayed at ‘Normal’ levels.

Shares of Novavax have risen over 18% year-to-date.

​For updates and corrections, email newsroom[at]stocktwits[dot]com.

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