Dec 24 (Reuters) – Retail investor funds into Novo Nordisk surged 32 times on Friday, as a dip in the Danish drugmaker’s stock following disappointing data on its obesity drug prompted many to buy in. According to Vanda Research, daily net inflows rose to $15.6 million from just $0.49 million the day before.
The increase in investment came after the company’s highly anticipated data on its experimental drug, CagriSema, showed a 22.7% weight loss in patients, falling short of the expected 25%. Novo Nordisk competes with U.S. rival Eli Lilly in the rapidly growing weight-loss drug market, which is expected to exceed $150 billion in revenue within the next decade.
“Retail investors are known for buying the dip, especially in popular stocks, and they keep doing so until it stops working,” said Marco Iachini, senior vice president of research at Vanda.
Novo Nordisk shares dropped 27% on Friday, wiping out over $100 billion in market value. The company’s U.S.-listed stock fell 21% to $81.50, marking its lowest level since August 2023. “This is the first time in two years that Novo’s stock has underperformed the S&P 500, so it’s probably too early to say if retail investors will abandon their buy-the-dip strategy,” Iachini added. The retail inflows on Friday may have offered an exit for institutional investors.
Vanda data shows that retail investor funds into Novo reached a high of $23.5 million on March 7, after promising results from its other drug, amycretin, which helped obese patients lose 13% of their weight.
Novo’s weight-loss drugs, including Wegovy, alongside Eli Lilly’s Zepbound, have sparked renewed retail interest in the healthcare sector. “With their GLP-1 product on the market and Eli Lilly in the news, many retail investors are familiar with Lilly,” said Sel Hardy, vice president of equity research at CFRA.
Hardy noted that dips in stocks like Lilly’s in October and mid-November may present attractive buying opportunities for retail investors. In fact, retail flows into Eli Lilly have outpaced those into Novo Nordisk in the second half of 2024, according to Vanda.
Lilly’s retail purchases peaked in August, after its weight-loss drug sales topped $1 billion for the quarter, leading to a $3 billion increase in its sales forecast.
Despite the increased interest in weight-loss drugs, retail activity in healthcare stocks still lags behind the tech sector, where stocks like Nvidia and Tesla often see higher retail trading volumes.
