Cathie Wood likes to hit the new trading week running. The ARK Invest CEO added to some of her positions on Monday. What did she buy with the market near all-time highs?
Zoom Video Communications (ZM 4.15%), Toast (TOST 3.77%), and Genius Sports (GENI -0.91%) are three stocks (down 45%, 25%, and 13% from their highs, respectively) that found their way into Wood's buy orders. She had existing stakes in all three stocks. Let's see why she's building up each of those positions.
Zoom Video Communications
Last year's obvious pandemic winner has been one of its biggest recovery laggards. Zoom has been pummeled since peaking 13 months ago. The slide might not seem all that surprising on the surface. We are back to physical classrooms, conference rooms, medical consultations, and family reunions.
Dig deeper and you find that we're still having Zoom virtual meetings. More importantly, there are more people than ever willing to pay Zoom for premium features within its evolving platform. Revenue soared 54% in its latest quarterly report. The days of triple-digit growth are over, but you can't exactly call a 54% year-over-year surge on the top line a signal of a company that is in a state of retreat.
Things aren't perfect in Zoomlandia. Revenue will continue to decelerate, and possibly decelerate sharply. Margins are coming under pressure. A major pending acquisition fell apart. Analysts now see growth slowing to the high teens in its next fiscal year on flattish earnings growth. The stock certainly doesn't deserve to be tickling last October's highs, but it's hard to fathom that this is half the company that it used to be after cramming years of accounts growth into just a handful of months last year.
Running a restaurant isn't as easy as it used to be, and Toast is a cloud-based software platform that keeps the entire operation humming. Managing the point-of-sale process and tackling inventory levels are standard eatery functions, but Toast offers restaurants everything else they need -- even before they think they need it. We're talking about managing digital orders and customer loyalty programs, and playing nice with third-party delivery apps.
More restaurant owners are realizing that if you're not running Toast, you could be toast in the new normal. Business is booming with more than 48,000 eateries on its all-in-one restaurant management system.
Revenue rose only 24% last year to $823.1 million, but that was going to be a challenging year with many restaurants and most dining rooms shuttered for the lion's share of the year. Business is picking back up in a major way. Revenue has soared 105% through the first half of this year. Annual recurring revenue is growing even better, up 118% over the past year. The bottom line is like a steak served up rare: There's a lot of red down there. However, Toast is at the phase in its growth cycle where building up its client base is more important than its profitability.
We're in peak sports season right now. Just as the World Series is capping off the 2021 baseball season, we have pro football, basketball, and hockey entertaining enthusiasts. With more sports fans interested in tracking sports and placing bets, Genius Sports is there as the brainiac in the cheering section.
Genius Sports keeps an eye on numbers that separate winners from losers. Its data and software solutions are popular with sportsbook operators that need official statistics and scores. The company isn't just about the data on the field of play. It also helps the betting industry manage customer acquisition and fan engagement.
Like Toast, Genius Sports wasn't trading until earlier this year. Also like Toast, business is starting to pick up. Revenue has risen 52% and then 108% in its first two quarters as a public company.
Zoom, Toast, and Genius Sports are strong growth stocks. Revenue rose between 54% and 108% in this most recent round of financial updates. There's a lot to like in all three, and ARK Invest's Wood seems to agree.