Cathie Wood is finding it hard to catch 2020 in a bottle again. The growth investor who became a market icon as the co-founder and CEO of the popular Ark Invest exchange-traded funds (ETFs) has been losing more than winning these days. Her investing style seemed to be marching back into fancy earlier this summer, but her most popular ETF has surrendered 22% of its value just over the last three weeks.
She's not one to shy away from fire sales, so it's not a surprise to see her adding to her positions in DraftKings, Zoom Video, and Twilio on Tuesday. Let's see why she's building up her stakes in these three names.
DraftKings
The NFL season kicks off -- literally and figuratively -- this week, so let's talk about DraftKings. The online gambling and fantasy sports specialist is driving down the field these days, even if it may not seem that way with a stock that is a whopping 79% below last year's all-time high.
Last month's quarterly report was a touchdown. Revenue surged a better-than-expected 57%, and the good news didn't stop there. DraftKings boosted its full-year revenue and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) guidance. There are now 1.5 million average monthly unique paying customers, a 30% increase over the past year. Average revenue per paying user is up also up 30% over the past year.
There's a lot of red tape to untangle in securing gaming rights in new markets, but DraftKings continues to grow its reach. It opened its online sportsbook in Kansas last week. Recent analyst notes find Wall Street pros jacking their price targets higher, encouraged by DraftKings' unique position in the market.
Zoom Video
Momentum is picking up for DraftKings, but the same can't be said about Zoom Video. The videoconferencing leader has surrendered 18% of its value since posting disappointing financial results two weeks ago. It's not just Wood who may have peaked two years ago. Zoom shares are a blistering 86% below their late 2020 peak.
The deceleration in top-line growth at Zoom has been brutal, falling sharply in each of its last six quarters.
- Q4 2021: 369%
- Q1 2022: 191%
- Q2 2022: 54%
- Q3 2022: 35%
- Q4 2022: 21%
- Q1 2023: 12%
- Q2 2023: 8%
Guidance calls for the slowdown to continue with a 5% increase in revenue for the current fiscal quarter. Despite a positive net dollar expansion rate north of 120% for its enterprise customers, a lot of casual users have moved on now that jobs, schooling, and reunions have returned to in-person affairs.
Twilio
Back to the world of healthy double-digit revenue growth, Twilio came through with a 41% year-over-year increase in its latest report. Revenue and earnings exceeded expectations, but disappointing near-term guidance is why the stock is a market laggard. Like Zoom, shares of Twilio are down 86% from their all-time highs.
The provider of in-app communication solutions is finding that some of its customers in hard-hit industries aren't delivering the kind of volume that Twilio typically sees. Crypto exchanges, social networking sites, and consumer on-demand businesses have been struggling in recent months, and Twilio sees revenue slowing to a 31% gain for the current quarter.
DraftKings, Zoom, and Twilio are all trading well below their highs, but they're all still compelling growth stocks at attractive price points. Wood has been buying the wrong stocks on the way down since last year, but she may be on to something this time.