Growth stocks aren’t immune to periods of sluggishness, even those picked by prominent investors like Cathie Wood, the mastermind behind investment management firm Ark Invest and its flagship ETF Ark Innovation (ARKK).
As investors shift their money from growth opportunities to investments that might better perform during the country’s ongoing recovery from COVID-19, ARRK, and many of its constituent stocks, are struggling to generate much momentum this year.
But many Cathie Wood stocks are still brimming with legitimate upside. Let’s take a quick look at five stocks Wood is championing that could be due for a September rebound.
Twitter (TWTR)
Total shares owned by ARKK: 7.57 million
Market value of owned shares: $490 million
Weight % of ARKK: 2.18%
Twitter’s been in a bit of a slump these last six months. Its stock price is down 16% since March 1st.
But that hasn’t deterred Wood. Toward the end of July, ARKK’s exposure to the social media giant grew by an additional 982,205 shares.
Twitter may already be ubiquitous in terms of recognition and its influence on public discourse. But the company’s recent financials point to the kind of consistently increasing revenues that should have growth investors drooling.
In July, Twitter reported second-quarter revenue of $1.19 billion — an 87% increase year over year — driven by the company’s improved ad performance, its inclusion in major product launches and an 11% rise in monetizable daily users.
During the company’s Q2 earnings call, CEO Jack Dorsey alluded to the company’s expanding vision, which includes “AI, decentralization and the internet finally having access to a global native currency in Bitcoin.”
The three trends, Dorsey said, will help Twitter “do our jobs better, and we intend to lead the way in each.”
Tesla (TSLA)
Total shares owned by ARKK: 3.28 million
Market value of owned shares: $2.4 billion
Weight % of ARKK: 10.65%
Wood hasn’t been quite as bullish on Tesla this year. She added almost 111,000 shares of the electric vehicle maker’s stock to ARKK in July, but then sold about 4% of its stake in the company in the first week of August.
Electric vehicles will feature prominently in the planet’s race to cobble together a working, carbon-neutral future. With Tesla being the unquestioned leader in the electric car space, the modest 3% return on its stock year to date shouldn’t be taken too seriously by investors.
Tesla shares tanked in the early part of the year, falling from $883 on Jan. 26 to $563 on May 19. It’s been relatively smooth sailing since then.
As of Aug. 30, Tesla stock was selling for $730 a share.
Zoom (ZM)
Total shares owned by ARKK: 2.83 million
Market value of owned shares: $984 million
Weight % of ARKK: 4.37%
Zoom is not having a great week. Between close on Monday and noon Tuesday, shares in the communications tech company tumbled by 15%, wiping out an estimated $15 billion in market value.
That won’t please investors who own a piece of ARKK, which added more than 95,000 shares in Zoom in early June.
Those selling off Zoom stock seem to be spooked by diminishing growth prospects. During a Q2 post-earnings call, company CFO Kelly Steckelberg said the country’s recovery from the pandemic has occurred “a little bit more quickly” than the company had anticipated, resulting in more in-person interactions and less demand for a digital meeting platform like Zoom.
The company’s $1 billion in Q2 revenue, however, shouldn’t be overlooked, nor should the fact that the portion of its business that targets corporations hasn’t shown the same sluggishness as its individual and small business operations.
Square (SQ)
Total shares owned by ARKK: 3.28 million
Market value of owned shares: $892 million
Weight % of ARKK: 3.96%
In July, Wood added just under 180,000 shares of payments services firm Square to ARKK’s portfolio.
The purchase followed an announcement by Square founder Jack Dorsey — yup, the Twitter guy — that his company is developing a new Bitcoin platform for the financial services industry. The announcement came a week after Square divulged its plans to create a hardware wallet for bitcoin to help bring cryptocurrency more into the mainstream.
Square’s future crypto play didn’t just get Cathie Wood’s attention. Analysts polled by CNN expect Square stock to increase by [almost 16%] in the next 12 months and sales to improve from the $9.4 billion reported in 2022 to more than $20 billion in 2022.
Square’s been having a fairly volatile 2021, but it’s stock is up more than 24% since the beginning of the year.
Robinhood Markets (HOOD)
Total shares owned by ARKK: 4.8 million
Market value of owned shares: $209 million
Weight % of ARKK: 0.93%
Having gone public only a month ago, financial services company and commission-free trading pioneer Robinhood has already seen its stock increase by almost 27%.
Ark Invest got in on the ground floor, snapping up 1.3 million shares shortly after Robinhood’s IPO, and has increased its investment since then.
Robinhood’s business model has generated plenty of hype, not to mention copycat fee-slashing amongst its competitors. If the hype translates into a growing, engaged customer base that continues making a high volume of trades using the company’s platform, it should enjoy steady, solid revenues.
The company is branching out into other services, too, so if the market corrects and its user base becomes less active, Robinhood should have other income streams to tap into.
“As Robinhood branches out into other forms of finance, including ‘buy now, pay later’ cards, I think [CEO Vlad Tenev’s] army of 22 million users will grow and become more powerful,” says “Mad Money” host Jim Cramer.
Get in on the growth
If you’ve got the kind of iron stomach required for the ups and downs associated with growth stock investing, there are multiple ways to get yourself started.
In addition to Robinhood, there are a number of other digital platforms you can use to put your money to work.
One even allows you to invest in a diversified portfolio using little more than the “spare change” left over from your everyday purchases.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
