- Cathie Wood believes that inflation will soon be replaced by deflation.
- Deflation may pose issues for the economy, such as slowing demand for products and borrowed capital.
- Shares of the ARK Innovation ETF(ARKK) are down over 50% year-to-date.
It’s been a difficult year for Cathie Wood stocks and exchange-traded funds, as theARK Innovation ETF (NYSEARCA:ARKK) has lost over 50% of its market capitalization. The losses have been driven by supply chain inefficiencies, inflation, and subsequent interest hikes to combat inflation. However, Wood believes that inflation will soon cool down and be replaced with deflation. Falling commodity prices, freight charges and stable gold prices have aided in her belief.
At first glance, it appears that investors would much rather welcome deflation over inflation. However, if consumers and companies believe that prices will fall, it can lead to less demand for products and services, such as borrowing capital. This can ultimately lead to more pain for the economy and cause companies to reduce production, which can lead to layoffs.
With that in mind, let’s take a look at the top five stocks that Cathie Wood is buying right now.
5 Stocks Cathie Wood Is Buying Right Now
1. Roblox (RBLX)
Last week, Roblox(NYSE:RBLX) announced that it would launch next year. The metaverse company boasts a network 52 million users, signaling many use cases for monetization. Roblox has already tested out portal ads with companies like Warner Bros. Discovery(NASDAQ:WBD) and has plans for further testing by the end of the year. Portal ads bring an interacting user directly to Roblox’s platform. Still, a set ad format has not been decided on and will be influenced by the results of testing. On the other hand, shares of RBLX have declined by over 40% since its initial public offering.
That hasn’t stopped Wood from dollar-cost averaging into her position. On Sept. 16, ARKK picked up107,199 shares, bringing its total share count to 5.78 million shares.
2. Intellia Therapeutics (NTLA)
Intellia Therapeutics(NASDAQ:NTLA) operates as a genome editing company that utilizes the CRISPR system for curative therapeutics. On Friday, the company released preliminary data for two of its CRISPR treatments. The data showed that patients who received the experimental therapy “experienced a dramatic reduction in blood markers linked to their diseases.” Furthermore, the treatment reduced toxic protein by 93% in the following four weeks. Despite the news, shares of NTLA fell by as much as 16% after the announcement. An Intellia spokesperson stated that the company can not explain every price fluctuation and added that the data was ultimately a good sign for NTLA.
Wood seems to agree. On Friday, ARKK and the ARK Genomic Revolution ETF(BATS:ARKG)purchased a combined318,875 shares of Intellia.
3. Verve Therapeutics (VERV)
Verve Therapeutics(NASDAQ:VERV) is a biotechnology company that seeks to protect patients fromcardiovascular disease. Like Intellia, the company places an emphasis on safe gene editing. Studies have shown that some naturally occurring gene variants lower the risk of atherosclerotic cardiovascular disease (ASCVD) and heart attacks. What Verve is trying to do is mimic these gene variants and turn off the genes that cause ASCVD through a single-course therapy. Furthermore, the company seeks to replace the traditional care model for cardiovascular disease and replace it with an in vivo liver-directed gene editing treatment
Between Sept. 13 and Sept. 16, ARKG bought213,111 shares of VERV. After the purchase, VERV is now the 12th largest holding among 46 total in the ETF.
4. Teladoc (TDOC)
Teladoc’s(NYSE:TDOC) earnings and profitability have been hampered by a $2 billion goodwill impairment charge related to the acquisition of Livongo and its stock-based compensation (SBC) program. Meanwhile, the effects of the coronavirus pandemic are all but gone. The pandemic was a major beneficiary for the telehealth company, as patients opted for virtual health appointments instead of going in person.
However, the long term prospects of Teladoc still remains intact. Telehealth is estimated to grow at a compound annual growth rate (CAGR) of more than 26% through 2027. In addition, the company provides services for over half of the Fortune 500 companies. Meanwhile, shares trade at a 2.1x price to sales (P/S) multiple, compared to 7x a year ago.
Wood remains highly convicted on TDOC and purchased44,359 shares on Sept. 16. After the purchase, TDOC is now the fourth-largest holding among all Ark Invest ETFs.
5. DraftKings (DKNG)
Shares of DraftKings(NASDAQ:DKNG) are down by over 30% year-to-date, although there are several positive catalysts on the horizon. First, the start of the NFL season will undoubtedly raise gambling revenue and has historically been the best time of the year for the company. The American Gaming Association has predicted the 2022 NFL season will see a record number of wagers placed on games.
DraftKings has also inked a deal with Amazon(NASDAQ:AMZN) to be the sole provider of in-game betting for the e-commerce giant’s “Thursday Night Football” (TNF) stream. The two companies have signed a multi-year deal that will also see Amazon advertise DraftKings in each TNF game. Meanwhile, the 2022 NBA season is set to kick off on Oct. 18.
On Sept. 12 and 13, two ARK ETFs purchased a combined185,771 shares of DKNG. After the purchase, Ark Invest now owns a total of 21.81 million shares.
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