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DraftKings Jumps on ARK Invest Nod; Nasdaq Climbs on Travel Stock Strength

By Dan Caplinger - Feb 2, 2021 at 2:19PM

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Ace investor Cathie Wood bought some of the online betting company's shares.

The stock market moved higher again on Tuesday, and the Nasdaq Composite (^IXIC 3.33%) was a big winner. As of 2 p.m. EST, the Nasdaq was up another 1.7%, adding to its gains from Monday and starting to approach its all-time record.

Wall Street has seen just how powerful influencers can be in affecting the mindset of the overall market. One person that many investors have been paying attention to recently is Cathie Wood, the chief investment officer of active ETF pioneer ARK Invest. Wood showed just how much power she has when investors sent shares of DraftKings (DKNG 3.37%) higher on Tuesday following a big purchase by one of her ETFs. Meanwhile, the Nasdaq's travel stocks, including Booking Holdings (BKNG 2.00%) and Expedia (EXPE 0.52%), made solid gains as well.

A big bet on DraftKings

Shares of DraftKings were trading more than 9% higher as of mid-afternoon Tuesday. Investors reacted favorably to having Wood and ARK Invest on their team.

Two hands pushing big pile of poker chips forward on red felt.

Image source: Getty Images.

ARK Next Generation Internet ETF (ARKW 5.67%) made a sizable DraftKings purchase on Monday, acquiring more than 620,000 shares. That might not seem like that big a deal, given that on an average trading day, more than 18 million shares of that stock change hands. Yet the roughly $35 million investment represented roughly half a percent of the active ETF's portfolio. That's a solid first step, and some believe further purchases could be forthcoming.

ARK Invest has gotten so much attention because its funds have done so well. All five of its active ETFs at least doubled their shareholders' money in 2020 by latching onto some of the most lucrative trends in the market. That success has continued into 2021, and being included in an ARK Invest portfolio has become a mark of distinction among growth stocks.

DraftKings is getting ready to launch its sportsbook and casino app on the Google Play platform for use on Android-powered mobile devices, and many shareholders were already excited about the company's growth prospects. They're even more bullish now, and it'll be interesting to see if DraftKings stock will be a winning bet from here.

Hitting the road

Online travel stocks were winners as well as of mid-afternoon Tuesday. Booking Holdings had climbed by around 4.5%, while Expedia was up more than 7%.

Both companies' businesses have gotten crushed by the COVID-19 pandemic, sending their revenues sharply lower. Yet they are enthusiastic about their opportunities to bounce back. On Monday, Booking Holdings CEO Glenn Fogel talked about how travelers are still finding ways to leave home, but noted that they're tending to book trips much closer to their departure dates to avoid problems with travel restrictions.

The distribution of COVID-19 vaccines should help get more people back in the air and visiting more remote destinations again. Moreover, given the pent-up demand for travel, Expedia and Booking Holdings could well make up for some of 2020's lost business. In particular, Expedia's Vrbo division has made big strides during the pandemic, because more people have sought separate accommodations in single-family homes rather than accepting the cramped quarters of a hotel.

For much of the past year, Nasdaq investors have just focused on winners and allowed them to keep on winning. But as 2021 moves forward, some of the best performers might well come from the ranks of beaten-down companies that are poised for big comebacks.

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Stocks Mentioned

DraftKings Inc. Stock Quote
DraftKings Inc.
$14.72 (3.37%) $0.48
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$12,131.13 (3.33%) $390.48
Booking Holdings Stock Quote
Booking Holdings
$2,265.98 (2.00%) $44.47
Expedia, Inc. Stock Quote
Expedia, Inc.
$130.97 (0.52%) $0.68
ARK ETF Trust - ARK Next Generation Internet ETF Stock Quote
ARK ETF Trust - ARK Next Generation Internet ETF
$58.16 (5.67%) $3.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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