NEW YORK, July 21 (Reuters Breakingviews) – Moderna (MRNA.O) has turned an experimental technology into a wildly successful vaccine. It has now entered the stock market’s big league by joining the S&P 500 Index on Wednesday. Frantic trading followed the announcement, with turnover topping $34 billion yesterday read more , and the stock leapt by nearly a fifth, to bring the gain for the past 12 months to 400%. Yet inclusion means both benefits and problems.
Joining the index forces passive tracker funds to buy. It also brings more attention and credit ratings half a notch higher, a study shows. But belonging to the establishment can also sap qualities that make a firm like Moderna successful. Having shareholders that are more disengaged might increase the potential for poor governance. Worse, the company will start comparing itself to other big firms. As a result, executive pay usually rises. And firms typically invest less and buy back more stock after inclusion. Moderna can’t rest on its laurels. It needs new drugs as the pandemic fades read more . Otherwise, it risks dropping back into the minor leagues. (By Robert Cyran)