After a great 2020 and a horrendous 2021, the Ark Invest family of exchange-traded funds (ETFs) is hoping to get rolling again in 2022. Cathie Wood runs the show, and since she publishes the firm's daily transactions we can see what she's buying and selling for her growth-leaning funds.
Roku (ROKU -3.05%), Zoom Video Communications (ZM -0.82%), and Nextdoor Holdings (KIND 1.54%) are some of the stocks that Ark Invest bought on Wednesday. Let's see why Wood added to her existing positions in all three investments that have all shed at least two-thirds of their peak value.
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Roku
Roku recently clocked in with record revenue, users, streaming hours, and average revenue per user. It hasn't been enough to impress the market. The leading streaming video hub with 60.1 million accounts is trading 73% lower than last year's all-time high.
The platform is still growing, and so is its ability to monetize its captive audience. Average revenue per user recently clocked in at $41.03 for the past 12 months, a 43% jump from where it was a year ago. The rub here is that growth is slowing. Revenue decelerated to 33% growth in last month's financial update with expectations for the top line to rise just 25% for the current quarter. There have been supply chain challenges to grow its hardware footprint, and value investors are nervous at Roku's bent on increasing programming costs to beef up its proprietary content. Roku is still a category leader in a niche that should continue to grow.
Zoom
The rise and fall of Zoom is a tale that's been widely told, but with the stock dropping this week after a problematic quarterly report the shares are back to where they were 23 months ago. Is Zoom really nearly back to where it was just as the pandemic became a stateside calamity?
Zoom was already a popular platform for videoconferencing, but the COVID-19 crisis lit a fuse under the stock. Company meetings, classrooms, and social gatherings turned virtual, and just about everybody learned how to use Zoom. The tide is thankfully starting to turn, but is Zoom really going away? This week's report shows decelerating growth, but positive top-line gains all the same. Revenue rose just 21% for Zoom's latest quarter. Guidance calls for a 12% year-over-year increase for the current quarter and 11% for the new fiscal year. This was a company that rattled off five consecutive quarters of triple-digit growth until this past summer.
The stock has plummeted 73% since topping off 13 months ago. Zoom is now trading at 27 times trailing earnings, but margin pressures will eat into Zoom's profitability in the near term. Bullish catalysts may seem hard to find at this point, but Zoom isn't going away anytime soon.
Nextdoor
Last year was a rough year to go public, especially for companies that hit the market going the special purpose acquisition company (SPAC) route. Nextdoor Holdings announced last summer that it would be combining with a SPAC, and the combination was complete by early November. The stock went as high as $18.59 on its first day of trading, but it has shed 67% of its peak value as of Wednesday's close.
Nextdoor runs a localized message board where users can socialize with their neighbors. It fashions itself as a "kind" social network, hence the ticker symbol. A rough rookie year of trading only got worse this week. Nextdoor moved lower on Wednesday after posting fresh financial results, and Wood naturally decided to be a buyer when the market was selling. Sometimes you have to be kind when the market is unkind.
Nextdoor's fourth-quarter report was mixed. Revenue rose a better-than-expected 48% to hit $59.3 million, but its loss was larger than analysts were modeling. Its guidance calls for top-line growth to decelerate in the current quarter, and the 41% year-over-year increase is slightly less than what analysts were forecasting.
The rub with Nextdoor is that it seems fairly limited in its current incarnation. Its weekly active user base has grown by 32% to 36 million over the past year, but average revenue per user -- for the final three months of last year -- is a mere $1.65. With a rudimentary platform it will take a lot to upgrade its monetization potential. Did I just say that? I guess it was just my turn to be unkind to the "kind" community builder.
