The market's showing signs of life, but that doesn't mean that last year's most popular money manager is just riding momentum plays. ARK Invest CEO, chief investment officer, and founder Cathie Wood isn't afraid to add to some of her out-of-favor positions across her exchange-traded funds.
2U (TWOU 4.17%), Genius Sports (GENI 2.75%), and Teladoc Health (TDOC -0.07%) have fallen between 40% and 60% from their all-time highs. Let's see why Wood added to all three positions for her ETFs on Monday.
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2U
The market may be near its all-time highs, but 2U has shed nearly half of its value since hitting 52-week highs in February. If we stretch the chart all the way back to when 2U hit an all-time high three summers ago the stock has surrendered almost two-thirds of its stock price.
As a provider of online graduate degree programs for universities and shorter virtual boot camps for professional certifications, 2U has been a volatile stock. The irony here is that the digital curriculum builder has been consistently growing its top line at 30% or better.
It has rattled off nine consecutive years of at least 30% in revenue growth, but that streak will unfortunately end this year. 2U's guidance this summer calls for 19% to 23% in top-line growth this year, suggesting that the second half of this year will decelerate dramatically.
The appeal of online education and 2U's global reach should help it recover. Wood certainly seems to think so. The lack of profitability over the years isn't ideal, but the low stock price is already discounting that sticking point.
Genius Sports
Any sport is ultimately a numbers game, and Genius Sports is a data beast. The company formerly known as Betgenius -- before it rebranded itself ahead of hitting the market in April -- offers data-driven solutions across various segments. For the gambling industry, Genius Sports offers a suite of sportsbook solutions including official sporting event data, fan engagement solutions, and customer acquisition and retention tools. Its betting technology, content, and services segments accounted for 73% of the revenue in its latest quarter.
Genius Sports also serves the sports and media markets. As the official data collector for the NFL, MLB, NASCAR, and other leagues it helps leagues and teams collect, analyze, and monetize data and live video. Media companies turn to Genius Sports for tools to acquire, retain, and engage customers.
It adds up. Revenue soared 108% in its latest quarter. ARK Invest initiated a position in Genius Sports in August. It's been nibbling on it ever since, including another small purchase of what is one of the smaller companies across Wood's funds on Monday.
Teladoc Health
Teladoc is the second-largest holding across the ARK Invest universe of ETFs, and Wood apparently can't resist the fire sale. The telehealth specialist has shed 58% of its value since its all-time high in February, but Monday marked the sixth consecutive trading day that ARK Invest added to its position.
Providing virtual care through videoconferencing sessions with doctors, therapists, specialists, and dietitians was a big winner last year during the darkest stretch of the pandemic when in-office care wasn't safe or feasible. Teladoc's business is still growing, but the market's concerned about intensifying competition as well as folks reverting back to in-office care as COVID-19 vaccination rates improve. It seems oversold, but that's probably what Wood has been thinking all the way down over the past eight months.
