Cathie Wood doesn’t have a dimmer on her. The Ark Invest co-founder and CEO was either completely illuminated or kept in the dark. The widely followed growth investor, who beat the market in 2020 and 2023, had a terrible year in 2021 and 2022. She also leaves 2024 with a challenging start.
She didn’t sit still.Ark bought Roblox (NYSE: RBLX), Roku (NASDAQ:ROKU)and Sophie Technology (NASDAQ:SOFI) Thursday, adding to her existing bits. Let’s take a closer look at these three stocks Wood is buying right now.
1. Roblox
Despite gains over the last year, Roblox stock remains a failed IPO. The online gaming platform developer found its shares trading below the $45 reference price when it went public three years ago. Roblox reached as high as $141.60 at the end of 2021, but is 74% below its current high-water mark.
That doesn’t mean Roblox isn’t currently growing. The platform’s popularity is growing again after stagnating a year ago. Revenue increased by 30% most recent quarter, driven by a 25% surge in bookings. Average daily active users grew 22% over the past year to 71.5 million, and total time spent on the platform grew 21%. In line with this growth, Roblox continues to remain attractive. Average monthly unique payers increased by 18 %, the increase is slightly smaller, but this does not affect the transaction.
Investors naturally cannot take growth for granted. Roblox, which caters to a largely younger user base, needs to continue to ensure it still resonates with a historically fickle audience. Its revenue guidance for 2024 is strong, but the bottom line remains a pressure point.
Roblox expects losses to widen this year. Analysts don’t think the open platform will reach adjusted profitability until 2027. Naturally, a lot will happen in the next three years. After a lot of ups and downs in his first three years, Wood is clearly a believer. Roblox is the eighth-largest holding among all Ark fund positions.
2. Roku
Roku stock has more than doubled this year, but 2024 is a different story. The company’s shares have fallen by more than a third this year alone after a poor financial report and the threat of new competitors.
The global original streaming service is still expanding its reach. As of the end of last year, the number of active accounts reached a record high of 80 million, an increase of 14%. Participation remains strong, but monetization is a stumbling block for the stock following its hot return into 2023. The sequential decline in average revenue per user was an unwelcome surprise to investors. One of its much smaller rivals has also agreed to be acquired by the country’s largest retailer, a move that makes a small company even more important in the coming years.
Wood has been increasing her stakes in more volatile stocks Streaming Service Stocks Ever since it started selling off. This is her fourth largest position in Ark.
3. Sophie Technology
Like Roku, SoFi has more than doubled in size in the last year. The digital bank and fintech provider joins Roku and Roblox in posting double-digit losses so far in 2024. SoFi ranks 30th in Ark Invest’s rankings.
SoFi posted first-quarter profits in its most recent quarter. The number of SoFi accounts has jumped 44% in the past year. SoFi is targeting compound annual revenue growth of 20% to 25% over the next three years. The problem is that economists now believe the Fed will delay inevitable rate cuts that could trigger a surge in lending activity until later this year, which has already been the case. Cooling off last year’s rally in fintech stocks.
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Rick Munariz Have a job in Roku. The Motley Fool has posts and recommendations in Roblox and Roku. Motley Fool at disclosure policy.
Cathie Wood Buying the Dip: She Just Bought 3 Stocks Originally published by The Motley Fool
