A Plunge, Corporate Restructuring, and a Bet on Technology – Novartis, HPQ Silicon, Volkswagen

Novartis Plummets 14%: Is the USD 12 Billion Bet Now Becoming a Problem?

Novartis AG's stock has fallen sharply in recent days. The share has lost about 14% since last Friday's close and last traded at CHF 111.44. This means that virtually the entire year-to-date performance has been wiped out in three trading days. Since the beginning of the year, the gain now stands at around 1.6%, while the year-to-date gain remains at approximately 9.2%. The Swiss pharmaceutical company's market capitalization has fallen to approximately CHF 230 billion.

The trigger for the price plunge is a major setback in the drug pipeline. The experimental drug Del-desiran failed to meet its primary endpoint in a Phase III trial for myotonic dystrophy type 1. This is particularly bitter for Novartis, as the company had only secured the program through its approximately USD 12 billion acquisition of Avidity Biosciences. Del-desiran was considered a key future growth driver. The drug was intended to help Novartis offset expiring patents on established drugs and secure growth beyond the end of this decade. Although some secondary study endpoints showed signs of clinical efficacy, the crucial primary endpoint was not met. Novartis now plans to analyze the full data and then discuss the next steps with regulatory authorities.

Even more problematic, this is not the only setback. Just a few days earlier, the cardiovascular drug Pelacarsen fell short in a key Phase III trial. As a result, two drugs on which Novartis had pinned great hopes have come under pressure within a very short time. At the same time, key existing products such as Entresto are nearing the end of their patent protection. Nevertheless, the company is sticking to its medium-term forecast for now. Between 2025 and 2030, sales are expected to continue growing by an average of 5 to 6% per year. However, following the latest trial results, the market is likely to take a much more critical look at where this long-term growth will come from. Further successful pipeline products or new acquisitions could therefore become more important.

From a technical analysis perspective, the picture has also deteriorated overnight. As recently as early September, the stock was trading above USD 132 and hovering near its annual high. With the plunge to below CHF 112, the price has now fallen well below all key moving averages (MA). The 20-day and 50-day moving averages are roughly in the range of CHF 125 to 126, respectively, and the 200-day moving average is near CHF 119.

This has clearly broken the previously intact uptrend for now. Following a loss of more than 14%, a technical rebound could follow in the short term. For a sustained recovery, however, Novartis would first need to restore confidence in its pipeline. This is precisely what will determine whether today's crash is a buying opportunity or the beginning of a prolonged correction.

HPQ Silicon: A Technology Bet Facing Its First Market Test

HPQ Silicon is shifting its focus in 2026 less toward commodity speculation and more toward the commercialization of its battery technology. Together with Novacium, the company received its first order in August for GEN3 battery packs, which are to be integrated into FPV drones for a regiment of the French Army. Operationally, this is an important validation step, but the pilot phase deliberately kept the scale small. The company itself emphasizes that the initial order is not financially significant for HPQ. For investors, the stock's value therefore lies primarily in its reference value, not in a short-term, tangible revenue lever. This point is especially important in a market where technology stocks are often measured against expectations rather than already scaled cash flows.

More telling than the single order, however, is the breadth of the ongoing trials. By the end of August, HPQ and Novacium delivered 30 custom-configured battery packs to three European drone manufacturers. Each drone manufacturer received 10 units to test and evaluate the battery packs in its drones. According to the company, the configurations were adapted to the technical requirements of the respective platforms in order to increase application relevance and, consequently, the potential for supplier qualification. At the same time, developments since the fourth quarter of 2025 indicate that market entry is not occurring abruptly but rather gradually through testing cycles. While this is technologically plausible, it extends the time it will take for robust series revenue to improve the balance sheet.

From a macroeconomic perspective, HPQ is entering a structurally attractive target market. The European Commission estimates the European drone services sector will reach a volume of approximately EUR 14.5 billion by 2030. At the same time, defence capabilities, industrial sovereignty, and the desire for more independent supply chains are becoming increasingly important in Europe, supporting demand for locally developed battery solutions. For drone manufacturers, energy density, weight, and range are the key performance parameters. This is where Novacium's silicon anode technology comes into play, as it is expected to enable higher power densities than conventional graphite anodes.

HPQ Silicon is thus a promising but still clearly speculative stock. Positive factors include steady operational progress, entry into the French defence supply chain, and the growing number of real-world evaluation programs. These are offset by typical early-stage risks such as low volumes and margins, dependence on partner companies, and the pending transition of technical successes into recurring revenue. Investors considering the stock should therefore view it as a technology-driven growth opportunity contingent on successful industrialization.

Volkswagen: Radical Corporate Restructuring—Is VW Now a Major Turnaround Bet?

Volkswagen shares are currently trading at around EUR 81.16. Since its July low of EUR 69.20, the stock has gained just over 17%. Nevertheless, the longer-term trend remains weak. Since the beginning of the year, the stock has fallen by about 22.6%, and over the past year, it has lost approximately 21%. The automaker's market capitalization currently stands at around EUR 40.67 billion. However, after the sharp decline in the share price, signs of stabilization are increasing.

The focus here is on the increasingly radical restructuring of the Volkswagen Group. Management aims to cut costs, simplify the complex corporate structure, and evaluate its holdings more closely for their strategic value. Even the Ducati motorcycle brand is now under scrutiny. A potential sale could provide Volkswagen with additional capital while simultaneously strengthening its focus on its core automotive business.

Even more important for investors, however, is the ongoing cost-cutting program. Volkswagen must significantly reduce costs and improve profitability, particularly at its core VW brand. The Group is responding to intense competitive pressure in China, rising investments in electric mobility and software, and the still comparatively high production costs in Germany. Job cuts and increased capacity utilization at its plants are expected to save billions in the long term.

Operationally, the situation remains tense. In the first half of 2026, Volkswagen generated revenue of approximately EUR 158.1 billion. Operating income fell by 11.6% year-over-year to approximately EUR 5.9 billion. China remains particularly problematic. There, Volkswagen is losing market share to domestic manufacturers such as BYD, while price pressure on electric vehicles remains high. Positive signs are emerging from Europe, however, where demand for the new electric models has recently picked up again.

The stock's valuation also makes it attractive to investors. For fiscal year 2025, Volkswagen paid a dividend of EUR 5.26 per preferred share. Based on the current share price, this corresponds to a historical dividend yield of around 6.33%. The key factor, however, will be whether Volkswagen can stabilize its profitability and thereby secure future dividend payments.

From a technical analysis perspective, a significant recovery is evident for the first time in months, and the stock has rebounded to as high as EUR 81.16 recently. As a result, the short-term moving averages have been surpassed once again. The range of approximately EUR 82 to 84 will now determine whether this can lead to a more sustainable trend reversal. The next major hurdle lies around the 200-day moving average in the EUR 89 range.

Volkswagen thus remains a turnaround play. If the company succeeds in significantly reducing costs, containing its problems in China, and streamlining its structure, the currently low valuation could prove an attractive buying opportunity.

Novartis is under pressure following two pipeline setbacks, as the market is now taking a more critical look at whether the projected growth remains sustainable despite patent expirations. HPQ Silicon remains a speculative technology play, but is gaining operational credibility with its first battery orders and ongoing test programs. Volkswagen is a turnaround play in which cost cuts, stabilization in China, and higher profitability will determine whether the low valuation represents an attractive entry opportunity or an attempt to catch a falling knife.