Is Cathie Wood's aggressive growth-investing style sliding out of fashion? The founder, CEO, and ace stock picker for the Ark Invest family of exchange-traded funds (ETFs) is starting to seem mortal again. After back-to-back years of losses, Ark Invest's flagship, the Ark Innovation ETF (NYSEMKT: ARKK), seemed ready to recapture its 2020 glory.
The fund that was up 46% in 2023 when it peaked in February has given up more than two-thirds of those gains. It's still beating the market with a 14% year-to-date gain, but this isn't 2020 anymore.
Wood is still making trades. She added to her existing positions in Roku (NASDAQ: ROKU), Intellia Therapeutics (NASDAQ: NTLA), and Robinhood Markets (NASDAQ: HOOD) on Thursday. Let's take a closer look at her latest moves.
There was a lot to unpack in what seemed like a blowout quarterly report from Roku earlier this week. The streaming video pioneer surprised the market by posting positive year-over-year revenue growth. It was modeling a 5% dip in the guidance that it issued back in February. Its forecast calls for a slight increase on the top line for the current quarter, something that it didn't model in two previous reports.
Red ink has been a problem for Roku, but it posted sequential bottom-line improvement for the first time in nearly two years. Its fresh guidance assumes the deficit will narrow again in the second quarter. Despite the seemingly upbeat report, the stock still opened 4% lower on Thursday following the fresh financials. At least three analysts have lowered their price targets.
Costs continue to outpace revenue gains. Negative free cash flow didn't impress. Roku closed out the period with a record 71.6 million active accounts, but some Wall Street pros were hoping for more than just 1.6 million net additions.
The good news still outweighs the bad. Its current monetization challenges will improve as the economy bounces back. Wood probably believes that this is a good point to add to her existing position. Roku is the second-largest holding across all of the Ark Invest portfolios.
2. Intellia Therapeutics
Wood believes in tech disruption in the medical field, explaining why she's investing in gene-editing stocks. She has been adding to her position in Intellia Therapeutics, and she's not the lone believer in the early-stage company. Canaccord senior biotech analyst Whitney Ijem initiated coverage of the stock two weeks ago with a buy rating.
We're still early in the clinical-phase trials for a pair of potentially promising gene-editing therapies. Ijem thinks that the prognosis is favorable in terms of safety and efficacy for the two candidates. She sees value-creation opportunities for investors as Intellia moves along the regulatory approval process, particularly with milestones it can hit in the coming year. Her $66 price target on the shares suggests that there's a beefy 82% of upside from current levels.
3. Robinhood Markets
April hasn't been kind for Robinhood Markets and its investors. The once-trailblazing exchange for stock, options, and crypto traders began the month by announcing a $10.2 million settlement with state securities regulators.
The settlement itself isn't a bad thing, giving Robinhood one less uncertainty to worry about. It stems from an incident three years ago when account holders weren't able to complete trades as a result of a platform outage. However, the penalty concedes "operational and technical failures that harmed Main Street investors," obviously not a good look for a platform formed to empower young mainstream traders.
CEO Vladimir Tenev also sold more than $800,000 worth of stock earlier this month. It's not a good look for an insider to be unloading shares with Robinhood in the single digits.
The good news is that Robinhood as a business is starting to recover. The exchange had 12 million active users and $74.7 billion in assets under custody at the end of February. Those metrics are down 28% and 14%, respectively, over the past year, but an improvement over the 11.4 million active users with $62 billion in account assets when the year began.
Robinhood also posted positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in its latest quarter. It's still far from being an elite fintech stock, but Wood is making the most of the lull and building up her position in the next-gen trading platform.
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