Cathie Wood Goes Bargain Hunt: 3 Stocks She Just Bought

Cathie Wood started the new trading week with a wave of buying. The CEO and co-founder of ARK Invest was busy buying stocks on Monday, picking up the pace after falling on many market days over the past month.

What was she buying this time? Wood increased his holdings in exchange-traded funds twilio (TWLO 4.32%), Year (YEAR 2.89%)and Tesla (TSLA -0.38%) on Monday. Let’s see what she might be seeing in these former market darlings who have fallen on hard times.

Image source: Getty Images.

twilio

Your smartphone is everything these days, and Twilio is a big reason why a simple consumer electronics device is indispensable. The company is the leading provider of in-app communication solutions behind many of the most popular and functional mobile apps.

Twilio is down 78% from the all-time high it hit early last year. The chart’s negative action does not mean that growth has left the edifice here. Twilio’s revenue increased 48% more than expected in its last quarter. Organic revenue was up only 35% but still beat market forecasts. The app maker also impressed Wall Street by breaking even. This is the second time in the last three quarters that Twilio has not delivered the expected red ink on the bottom line.

It wasn’t a perfect report. Its dollar net expansion rate is slowing, from 133% a year ago to 127% today. Put another way, year-over-year revenue growth from existing customers is slowing. The orientation wasn’t as impressive as the quarterly beat, either. But it is still a leader in a booming niche. Twilio is for sale, and Wood seems to agree.

Year

How far did Twilio fall, does get worse. Roku closed on Monday 82% below last year’s peak. The leading operating system for smart TVs is still drawing a crowd. There were 61.3 million active accounts, up 14% from last year. Revenue is growing even faster as average revenue per user has increased by 34%.

There are thousands of streaming services available on the Roku platform, and many of them will pay to stand out. Marketers also know that Roku’s captive audience (with the average account streaming nearly four hours a day) is a demographic worth reaching out to.

Hardware sales have dropped at Roku, largely due to supply chain restrictions. However, with so many smart TVs that come with the Roku OS as a factory-installed option, it’s not like dongles are the only way for Roku to get into your home. It has become a platform company as the ad revenue it collects has become its biggest contributor to revenue.

Roku consumers aren’t pulling away from their streaming habits. It just delivered a record quarter in terms of streaming hours, and that metric corresponds to a 14% increase in user base. In other words, we’re still streaming as much as we were a year ago, when there were fewer things to do outside the home. You need to like Roku’s future, and your current financial challenges should improve once the supply chain problem is resolved and Roku’s investments in content begin to roll in.

Tesla

Tesla was consistently Wood’s biggest stake in the past year and it has changed. It helps that the stock has rallied in 2021, a year in which many of its other big positions retreated. ARK even routinely sold shares in the electric vehicle (EV) maker, using the profits to water its weeds. Now that Tesla has also temporarily fallen out of favor – not as much as Twilio and Roku, but still below 43% of its high – it is a buyer again.

Tesla is still dominant in the EV market, despite most major car manufacturers now targeting that market. There were also some rumors last week about Elon Musk sending an email warning of a 10% reduction in the salaried workforce. He cleared things up over the weekend.

In short, Tesla doesn’t seem to be shifting into reverse. It’s redefining your workforce. Perhaps he is eliminating categories where he hired a lot of people or workers who were hesitant to come back to the office, as he recently ordered. Either way, Tesla has the right product for times when gas prices are out of control and rivals are unlikely to catch up to its proprietary Supercharger network of charging stations.

Twilio, Roku and Tesla had better days, with their shares 43% to 82% below their highs. However, they remain strong growth stocks, showing healthy year-over-year growth at the moment. Cathie Wood might be discovering something here.

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