Cathie Wood Buying the Dip: She Just Bought 3 Stocks

It’s not been a good year for Cathie Wood so far. The Ark Invest co-founder and CEO has seen many of her favorite stocks slide in an otherwise rising market. While 2024 is already off to a good start for most growth investors, Ark Invest’s largest exchange-traded fund (ETF) is trading down 4% year-to-date. Some of her top holdings have performed even worse.

shares Tesla (NASDAQ: TSLA), Roku (NASDAQ:ROKU)and Roblox (NYSE: RBLX) Shares are down between 20% and 31% this year, but Wood added to all three positions on Monday. Let’s take a closer look at the currently out-of-favor stocks she’s buying.

1. Tesla: down 31%

Tesla’s stock price more than doubled in 2023. This year, things are different.The leading electric vehicle (EV) maker announced share price declines in January Poor financial performance Fourth-quarter revenue grew just 3% to $25.2 billion, while adjusted earnings plummeted 40% to $0.71 per share. Analysts had expected higher expectations on both fronts.

It’s not surprising to see the company’s sales growth slowing and margins getting squeezed. Tesla spent much of last year slashing prices on its electric vehicles to attract enough demand to meet its increasing production of electric vehicles. Even the base Model X is now eligible for a $7,500 federal tax credit, which should help keep the car in circulation.

In fact, Tesla hasn’t had any problems selling cars: New car deliveries surged 20% in the fourth quarter. This is the result of a significant year-over-year decline in average selling prices, as well as buyers continuing to shift to the lower-priced Model 3. and Model Ys—resulting in a disappointing 3% revenue growth. Since the company is cutting prices faster than its potential cost savings, profits are naturally taking a hit.

Two people enjoy the fun of bumper cars.

Image source: Getty Images.

The stock began to rebound along with the broader market in February, but tumbled again this month on concerns that it would fail again this quarter. Tesla is offering aggressive promotions to buyers of its existing inventory as long as they own it. As the number of new electric vehicles ramps up in late March, observers are increasingly betting that first-quarter numbers will be weak. Bernstein analyst Toni Sacconaghi slashed his price target on Tesla to $120 from $150 on Tuesday, slashing his outlook for production this quarter and for all of 2024. He also put forward a profit forecast of $2.22 per share in 2025, well below the analyst consensus of $3.67 per share and well below Tesla’s profits in 2022 and 2023.

Wood doesn’t mind buying stocks that have lost nearly a third of their value this year. Tesla has previously rebounded from sharp selloffs. Tesla remains the second-largest holding across all Ark Invest portfolios.

2. Roku: down 29%

Shares of Roku, another top Ark Invest holding, have also more than doubled in the last year. It is currently the fund manager’s fourth-largest position. The streaming platform giant is boosting its engagement and growing its audience, but now there’s concern that its rivals are getting hungry and Roku may not return to profitability anytime soon.

Currently, there are 80 million active accounts on the Roku operating system, a 14% increase from last year. However, it’s still losing money, with average revenue per user posting a surprising sequential decline in a disappointing fourth quarter. Analysts don’t believe a return to profitability is expected until 2027, but Roku has launched initiatives to prioritize returning to profitability.

Wood was patient. As she watched, she held the remote control to buy more volatile substances. Streaming Service Stocks.

3. Roblox: down 20%

Roblox is Ark’s tenth largest holding. The online gaming platform developer didn’t double its market value last year like Tesla and Roku, but its 61% gain in 2023 outpaced the broader market average before fading in 2024.

Unlike Tesla and Roku, Roblox shares rose after the company reported better-than-expected fourth-quarter results. Revenue and bookings increased 30% and 25% respectively in the quarter, accelerating from the first half of the year. This year. Its revenue guidance for 2024 is also encouraging. But its loss forecasts have been widening.

Its daily active user count has recovered since a consecutive decline in the second quarter of last year. If the popularity of this gaming platform continues to grow, you can expect an uptick to follow. Wood seems to think so, judging by her decision Monday to take her stake in the company.

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Rick Munarriz holds a position at Roku. The Motley Fool has positions and recommendations at Roblox, Roku, and Tesla. Motley Fool has disclosure policy.

Cathie Wood Buying the Dip: She Just Bought 3 Stocks Originally published by The Motley Fool

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