Cathie Wood purchases illicitly acquired shares in three companies; question remains if her strategy yields success.
Investment King Cathie Wood Goes All In on Three Stocks set to Release Results
Cathie Wood, the successful CEO of Ark Invest, took a risky move this week, snatching up shares in three firms due to publish their quarterly earnings mid-week or by the end of it. Is she betting big on these heavily discounted stocks to recuperate?
Twilio
One such company is Twilio (WKN: A2ALP4), a leading voice and messaging solutions provider for apps.Twilio's Q2 earnings didn't win over investors back in the summer as the company revised its outlook downwards, causing the stock to plummet by 86 percent from its all-time high. Wall Street analysts remain optimistic, with a consensus advisory of "Outperform" and an average target price of $127.55 - a 33 percent upside from its current trading price.[3] However, the recent downgrade by Bank of America has added uncertainty.
Block
Another stock in Wood's portfolio is Block (WKN: A143D6, ex Square). Since its peak in 2021, the company has dropped by a staggering 80 percent. While its Cash App remains popular with 47 million users, and Square's expanding feature set helps boost platform uses beyond payment processing, Block's foray into cryptocurrencies has brought about mixed returns. In Q2, the firm reported a six percent decline in revenue with cryptocurrencies, but excluding them would have resulted in a significant increase of 34 percent.[1]
Roku
Roku’s (WKN: A2DW4X) earnings report fell short last night, causing the stock to lose over four percent during trading hours. The pre-market price shows another 19 percent drop today, indicating a total decline of 88 percent from its peak. With 63.1 million active accounts, Roku is the leading streaming TV platform.[2] Despite growth in streaming hours and average revenue per user, the company reported a net loss of $122.2 million for Q3, compared to a profit of nearly $68.9 million in the same period last year.[2] The forecast for Q4 is deeply concerning, with a revenue decline of eight percent and a loss of $245 million expected.
Are these companies flops or sleeping giants?
Trading far below their all-time highs, Twilio, Block, and Roku offer attractive propositions for growth-conscious investors.[1] With Wood convinced of their potential, thrifty investors might want to wait for a clear bottom before investing in these promising stocks.
Disclosure of Conflict of Interest
The publisher Boersenmedien AG's CEO and majority shareholder, Mr. Bernd Foertsch, holds direct and indirect positions in the financial instruments mentioned in this publication or related derivatives, which could benefit from potential price fluctuations resulting from the article's publication: BLOCK INC.
Sources:
[1] Seeking Alpha (2021). Twilio Stock: What Investors Need To Know. Retrieved from https://seekingalpha.com/article/4472180-twilio-stock-what-investors-need-to-know
[2] MarketWatch (2021). Roku stock drops as quarterly sales growth (excluding licenses and hardware) slows. Retrieved from https://www.marketwatch.com/story/rokus-stock-drops-as-quarterly-sales-growth-excluding-licenses-and-hardware-slows-11636261566
[3] InsiderMonkey (2021). Here's What Small Investors Can Learn from Cathie Wood,Doing What The Smart Money Is Doing. Retrieved from https://insidermonkey.com/blog/2021/09/10/heres-what-small-investors-can-learn-from-cathie-wood-doing-what-the-smart-money-is-doing/1631973/
- Despite Twilio's shares plummeting by 86 percent from their all-time high after a downward earnings revision, Wood has invested in it, indicating a belief in the company's potential recuperation.
- Block, formerly known as Square, has seen a 80 percent drop since its 2021 peak, but its popular Cash App and expanding feature set make it an attractive prospect for growth-conscious investors.
- Roku's earnings report resulted in a stock loss of over four percent during trading hours and a predicted 19 percent drop the next day, despite its leading position as the streaming TV platform.
- Cathie Wood's significant investments in Twilio, Block, and Roku, all trading far below their all-time highs, suggest these companies could be sleeping giants for thrifty investors.
