Cathie Wood has become the best-known fund manager for risk-tolerant growth investors. Her penchant for unearthing disruptive stocks has made Wood -- as ARK Invest's CEO, chief investment officer, and founder -- a name for investors to watch. Her exchange-traded funds were among last year's biggest gainers, and after a rough start in 2021, ARK Invest is starting to find its groove.
Every pick isn't a winner for Wood, but ARK Invest isn't afraid to buy stocks that Wood believes in when they take a hit. On Thursday, she added to her stakes in Twilio (NYSE:TWLO), Teladoc Health (NYSE:TDOC), and Robinhood Markets (NASDAQ:HOOD). Twilio and Robinhood were hit hard after reported quarterly results this week. Teladoc moved higher after reporting but is trading well below its all-time high. Let's take a closer look.
Shares of Twilio plummeted 18% on Thursday after the company reported disappointing financial results, and Wood was buying during the intraday weakness. The provider of in-app communication solutions beat expectations for the third quarter, posting stronger-than-expected revenue growth of 65% and a smaller-than-projected loss.
Unfortunately there were some pressure points, and at least five analysts would go on to slash their price targets on the stock following the report. Twilio's guidance calls for a much larger loss than analysts were modeling, and some Wall Street pros are voicing concerns about the state of gross margins at the company.
There's also the matter of the quality of its revenue. Twilio's been a growth star since hitting the market at $15 five years ago. It has clocked in with year-over-year revenue growth of at least 40%, and that pace was accelerating. Twilio's top line rose 55% last year, 64% through the first half of this year, and now 65% in its latest report.
However, a good chunk of its recent growth has come from acquisitions, and the 38% in organic revenue growth it just served up for the third quarter could be problematic. The silver lining here is that the stock has fallen so hard since its peak that even the sharply reduced price targets are higher than where Twilio is trading now.
Telehealth was all the rage during the pandemic. When we couldn't go visit a doctor, therapist, dietician, or other medical specialist, Teladoc was there with its easily accessible and affordable videoconferencing platform.
Teladoc's financial update on Wednesday afternoon was a mixed bag. It beat expectations on both ends of the income statement, but like Twilio, its guidance also calls for more red ink than analysts were forecasting. At least 10 analysts would go on to lower their price targets on the stock, but the shares still moved higher on Thursday.
Business is still growing at Teladoc, and the company expects to facilitate more than 14.5 million visits this year. It's standing out despite the growingly competitive marketplace for telehealth.
The quarterly report wasn't great, but since the stock has already shed more than half of its value since hitting all-time highs in February, the news came as a relief. Teladoc continues to be ARK Invest's second-largest holding across all of its ETFs, and on Thursday, Wood purchased more shares in four of the funds.
Robinhood Markets is now a broken IPO, buckling below its $38 debutante price tag after a brutal quarterly report. You can take your pick at which of the numbers tripped up the online-trading platform.
We can start with the 35% growth in revenue that was well shy of the 60% growth that Wall Street was expecting. Guidance was also problematic. There was also a sequential dip in monthly active users.
The trends aren't kind here. Losses are only getting larger, and average revenue per user is sliding.
Robinhood Markets traded as high as $85 on its fifth day of trading this summer, and now it's a broken IPO. Wood is buying the dip, but Robinhood Markets is going to have to introduce new features to stand out in an environment where traders are heading elsewhere.