This has been a tough year for ARK Invest founder and CEO Cathie Wood. Her style of investing has fallen out of favor, and many of her larger holdings have shed more than half of their peak values.
Among her funds' holdings, Twilio (TWLO 2.01%), Zoom Video Communications (ZM 1.82%), and Toast (TOST 4.42%) are down by 43%, 56%, and 50%, respectively, from the all-time highs they hit earlier this year. ARK Invest added to all three positions on Wednesday.
The best performer on this list -- relatively speaking, of course -- is Twilio, which has shed more than 40% of its value since peaking in February. It's a pretty dynamic company, providing developers of some of the most popular smartphone apps with in-app communication solutions.
What does this mean exactly? Well, if you're hailing a ride, it's Twilio helping you communicate with your driver. Twilio can help parties communicate by text or voice without having to leave a business's app or reveal sensitive contact information. Its success is tethered to the success of its active customers, which now number more than 250,000. Its dollar-based net expansion rate of 131% means that its returning developer clients are, on average, spending 31% more with Twilio than they were a year ago. This is a testament to both increased usage volume and the company's ability to "land and expand" with other platform offerings.
Twilio's revenue soared by 65% in its latest quarter, but acquisitions have typically padded its top line. Organic revenue rose by just 38%, and that result didn't please the market despite it being a healthy rate of year-over-year improvement. Investors are also concerned about larger than expected losses in Twilio's refreshed guidance, but you have to give the company the benefit of the doubt when it comes to investing in its future.
Zoom Video Communications
Another stock that was doing poorly this year even before its latest financial update sent the shares even lower is Zoom. The videoconferencing giant erupted onto the scene early last year when people found themselves in sudden need of an intuitive videoconferencing solution that would allow them to keep learning, working, and socializing during the early months of the COVID-19 crisis.
The public isn't as interested in the stock these days, but the irony here is that Zoom is still growing, even as we're now in the third quarter of lapping pandemic-era financials. Its revenue rose 35% in its most recent quarter, beating expectations and signaling that the platform's premium subscriptions are still essential purchases. Management is guiding for growth to decelerate to 19% in the current quarter, and even a recently botched acquisition isn't stopping the company from expanding its offerings to take advantage of its still sizable audience.
Restaurants are Toast these days, and that capitalization isn't a typo. More than 48,000 restaurants are leaning heavily on Toast, a cloud-based platform that manages everything from incoming orders to inventory management to customer loyalty programs.
Revenue skyrocketed by 105% through the first nine months of this year, and that was after climbing 24% in 2020 when most eateries were running with scaled-back operations. As we venture out to our favorite restaurants again -- and as Toast helps owners with the tech required to handle the boom in digital take-out and third-party delivery app orders -- Toast is well-positioned as a reopening play. But the stock has shed half of its value since peaking shortly after the company went public in late September.
Twilio, Zoom, and Toast remain viable growth stocks. They're just a lot cheaper now than they were earlier this year, and ARK Invest's Wood isn't afraid to follow some of her favorite stocks lower.