Around here, we like to say that stock markets fall faster than they rise but they rise more than they fall. Cathie Wood, the CEO of Ark Invest, has had to take some lumps as many of her favorite stocks have fallen hard. Now it looks as if the innovation-heavy stocks that form the cornerstone of Ark Invest's popular exchange-traded funds (ETFs) are mounting a steady comeback.
Patient investors who have held on to shares of Robinhood Markets (HOOD 4.44%), Matterport (MTTR 0.85%), and Joby Aviation (JOBY 4.90%), through the turmoil were rewarded with some significant gains last week. Here's why Wood thinks those stocks can continue delivering eye-popping returns.
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1. Robinhood Markets
Eventually, Robinhood wants to allow its customers to trade stocks and cryptocurrencies all day, every day. On Tuesday, shares of Robinhood jumped around 24% higher, after the company took a step closer to its goal.
The latest trading-day extension allows customers to buy and sell stocks from 7 a.m. through 8 p.m. ET. Now that many of Robinhood's customers have gone back to their regular day jobs, the extended hours could lead to a significant earnings bump.
Extended hours aren't the only important update likely to boost growth at Robinhood. The company is taking steps that could allow customers to set up tax-advantaged retirement accounts later this year.
In the U.S., you can usually avoid paying income taxes on up to $6,000 annually by depositing said income into a traditional individual retirement account (IRA). Most of Robinhood's competitors have been offering self-directed IRAs for years. An influx of investors who want to avoid unnecessary income taxes will probably do more to lift total revenue than another trading-hour extension.
2. Matterport
Shares of Matterport jumped 17% higher last Tuesday, as it was swept along with the general updraft that lifted most tech stocks last week. This company offers clients a "digital twin" generating platform that lets them scan physical spaces and re-create them in the metaverse.
It's just a matter of time before most offices, homes, and retail spaces in the real world have digitized copies for use in the metaverse. Matterport offers clients a chance to scan their spaces with enterprise-grade equipment or an everyday cell phone.
While gaming is an obvious application, Matterort's customers are finding more serious ways to employ the technology. For example, Damen Shipyards uses Matterport cameras to create digital twins of its vessels. Customers can use digitized versions to plan the layout of new ships without having to visit a site in person.
Matterport thinks there are around 20 billion spaces around the world that would be more valuable if they had a digital twin. At the moment, less than 0.1% of the world's real estate properties have digitized versions. That gives this niche business a lot of room to grow.
3. Joby Aviation
Shares of this air-taxi stock soared last week, in response to a better-than-expected fourth-quarter earnings call. Air taxis still aren't an option for anyone in the U.S., but Joby's making progress. Earlier this month, the company became the first to announce the submission of an area-specific certification plan to the Federal Aviation Administration.
In addition to progress with regulators, investors are chuffed with a net gain of $5 million in the fourth quarter. The company isn't allowed to operate yet, but the appreciating value of an air taxi business it acquired from Uber Technologies in late 2020 helped push its bottom line into positive territory.
As a pre-commercial-stage business that doesn't really know when it will be able to report steady sales, Joby Aviation's still a hyper-risky stock. Before whipping out a smartphone to buy shares of any of these stocks, it's important to realize that Wood isn't afraid to add them to Ark Invest's ETFs, because those portfolios are highly well diversified. If you want to follow Wood's lead with these stocks, be sure to make them a small part of a much larger portfolio.
