Danish investors remain undeterred by a significant market crash, continuing to buy shares in Novo Nordisk despite a sharp drop in stock value. The pharmaceutical giant's recent revenue forecast adjustment and leadership change led to a 25% stock plunge, yet new investors are seizing the opportunity, indicating a potential rebound.
Despite Market Crash, Danish Investors Flock to Novo Nordisk
Despite Market Crash, Danish Investors Flock to Novo Nordisk
"The slaughter," as it's been called in Danish media, saw small investors in Denmark lose nearly 60 billion Swedish kronor in a single day. Yet, this hasn't stopped them from buying shares in Novo Nordisk.
– But the stock might fall even further, says Per Hansen, an economist at Nordnet in Denmark.
Last week, the weight-loss giant adjusted its revenue growth forecast while introducing a new CEO. These announcements caused the stock to plummet nearly 25% on the Copenhagen Stock Exchange, reducing its market value by almost 100 billion dollars.
Sydbank estimates that Danish investors lost 38 billion Danish kroner (approximately 57 billion Swedish) in regular stock portfolios in one day, prompting economists to analyze the broader impact on the Danish economy. Even before last week's crash, the stock had fallen significantly this year, with a total decline of over 50%. Once Europe's highest-valued listed company, it no longer ranks in the top ten.
– There's no doubt that Novo Nordisk significantly impacts the Danish economy, but it's not as if Danish exports will drop by 10–15% just because Novo Nordisk faces challenges with Ozempic and Wegovy. However, we will notice the effects. A natural consequence is that we will see fewer employees at Novo Nordisk. It's inevitable, says Hansen.
"Buying Spree"
Despite the grim news, investment enthusiasm hasn't waned. New stock investors seem to have taken notice of the Danish pharmaceutical giant in what Nordnet describes as a "buying spree."
– Over the past week, 12,600 new customers at Nordnet have purchased shares in Novo Nordisk, and we've seen eight times as many buys as sells. Investors who already own shares are understandably disappointed, says Hansen.
According to him, the purchases have been for relatively small amounts, which may indicate that major investors are bracing for further market declines in connection with the quarterly report to be presented on Wednesday.
Three Crucial Factors
Hansen believes that three factors will determine the stock's future performance.
– I think investors will watch how Novo's new CEO prioritizes research funding. Then, they want to know how they will trim expenses. When a company significantly downgrades its revenue growth expectations, it needs to adjust its spending.
An external factor that could influence the stock's performance is Novo Nordisk's arch-rival, the American pharmaceutical company Eli Lilly.
– They release their quarterly report on Thursday, and people will look at how sales of Zepbound (Eli Lilly's weight-loss drug) are doing in the US and globally to better understand how much Eli Lilly has managed to take from Novo Nordisk's revenue targets.