Thursday wound up being a wild trading day, and that's the kind of volatility that Cathie Wood loves. She's the co-founder and CEO of the Ark Invest family of exchange-traded funds (ETFs). Wood is also the face, voice, and primary stock picker of the growth-oriented funds.
Ark Invest publishes its transactions daily, so what did Wood add to her portfolios on Thursday? Zoom Video (ZM 3.63%), Velo3D (VLD 2.96%), and Coinbase Global (COIN 7.25%) are some of the stocks she bought during that bucking bronco of a trading day. Let's see why she added to her existing positions in all three investments on Thursday.
Zoom hit a 22-month low on Thursday morning. In other words, the company that became the no-brainer play at the start of the pandemic is now trading where it was in early April of 2020. Is the dramatic drawdown fair? Classes, live events, family reunions, and even company meetings have largely returned to being in-person affairs, but have we really cut Zoom loose?
A lot of businesses find Zoom's videoconferencing platform more convenient and productive than the old-school conference room gatherings. There was a boom in webinars and live video broadcasts that isn't going away just because the pandemic is showing signs of winding down -- again.
Zoom is still growing. Revenue for its latest reported quarter -- the fiscal third quarter it posted in late November -- saw revenue climb 35% year over year to top $1.05 billion. The number of businesses spending more than $100,000 a year on Zoom has soared 94% over the past year. We'll get a fresh update on Zoom when it reports early next week. Wood's buying in now suggests she believes either that it will be a better-than-expected report or that the stock's dramatic sell-off has already discounted any potential hiccups in Monday afternoon's report.
Not every name in the Ark Invest portfolio is a household name. Wood has been aggressively buying into Velo3D since March of last year. Velo3D's Sapphire platform is a 3D printing solution companies can use to make mission-critical parts that aren't easily crafted with other additive manufacturing options.
Velo3D has been pretty sleepy to this point, clocking in with just $23.8 million in trailing revenue. However, things are about to get busy. Velo3D recently rolled out Sapphire XC, an upgraded version of its platform with manufactured parts that can cost as much as 75% less than the original platform. It's also able to deliver a fivefold increase in productivity (the XC stands for eXpanded Capacity).
Velo3D is now forecasting $89 million in revenue for 2022, which would more than triple last year's top-line results. Analysts don't see Velo3D turning a profit until 2024, but with a unique product with inherent advantages for industrial businesses that need in-house parts to keep building, it has a bright future if it can keep its growth momentum going.
Wood added to one of her largest positions -- Coinbase -- just hours before it would go on to report its fourth-quarter results. The leading crypto trading exchange is the third-largest holding across all of her ETFs.
The market's initial reaction to Coinbase's fresh financials isn't encouraging. It did post better-than-expected results for the fourth quarter, wrapping up the year with record revenue, assets on platform, and monthly transacting users. However, its guidance was soft. With volatility and crypto prices low so far this quarter, Coinbase is bracing investors for a sequential dip in trading volume and retail monthly transacting users. Its full-year guidance also shows a wide range of scenarios -- not exactly a surprise given the ups and downs of crypto -- but also a commitment to investments and rising costs that could eat into its juicy trailing margins.
It wasn't the kind of report that Wood likely expected when she bought in ahead of earnings, and hopefully she's not making a mistake by increasing her stake in Zoom ahead of that report next week. Investors are fine with letting Wood take chances. It delivered spectacular returns in 2020, even if last year -- and so far in 2022 -- the setbacks have been substantial.