Growth stocks are getting hit pretty hard, and that's naturally going to be bad news for Cathie Wood. The co-founder and CEO of Ark Invest is seeing her family of exchange-traded funds (ETFs) hitting new lows this week, but Wood isn't backing down from her approach to finding the market's leading edge investments.
Even as her portfolios were taking another hit on Wednesday, Wood was actively adding to some of her beleaguered positions. Ark Invest added to Vuzix (VUZI -2.96%), Velo3D (VLD -0.61%), and Coinbase Global (COIN 4.68%) through the trading day's deluge. Let's see why she added to her existing positions in all three investments on Wednesday.
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Vuzix
The future could be a pretty cool place to be, but Vuzix is walking backwards. The provider of smart glasses and augmented reality tech saw its shares retreat earlier this week after posting disappointing financial results. Sales plummeted 36% as geopolitical tensions in Europe and ongoing COVID disruptions are upending plans of its suppliers as well as partners. Vuzix also delivered a larger-than-expected deficit for the quarter.
Smart glasses may be seen as a novelty for the masses, but Vuzix is pushing for wider adoption of the wearable tech in leading industries including telehealth, warehouse logistics, field service, and manufacturing. It's not a household name, but Vuzix has actually been trading -- largely in the single digits -- since going public in 2013.
There are only a handful of analysts covering Vuzix, but they share the company's optimism about the future. Wall Street sees revenue still moving higher this year -- up 16% -- despite the sharp decline in the first quarter. They see Vuzix accelerating to 50% top-line growth next year.
Velo3D
Another under-the-radar company falling short of financial expectations this week is Velo3D. Its Sapphire platform is a 3D metal-printing solution that helps companies secure specialized parts in the aerospace, aviation, industrial power, and oil and gas sectors. Unlike Vuzix, Velo3D did post top-line growth in this week's quarterly update. Year-over-year revenue gains have been positive through all three quarters of Velo3D's brief tenure as a publicly traded company, but the tenfold increase in revenue to $12.2 million was just shy of the $12.4 million that analysts were forecasting. Velo3D's adjusted loss of $0.13 a share also fell short of expectations.
The company is upbeat about the Sapphire XC system that it recently began shipping. It makes parts for 75% less than its original platform. Sapphire XC is also faster, producing parts five times faster than its previous system. Velo3D's goal of increasing sales from $27.4 million last year to $89 million this year is ambitious, but it's still on track. It already has 75% of that target already either recognized or booked in 2022. Its backlog of orders has increased 80% over the past year to reach $55 million. Investors may have cooled on 3D printing stocks, but Velo3D's fundamentals are starting to heat up.
Coinbase
It's been a brutal week for crypto, and the same can be said about Coinbase as the leading exchange for digital currencies. We've already seen two prolific stablecoins lose their peg to the $1 mark, at least temporarily. The confidence crisis is upending trading prices for most cryptocurrency denominations.
It's against this unsettling backdrop that Coinbase also had the misfortune of stepping up with underwhelming financial results. Trading volume on the platform -- hitting a record $548 billion in the fourth quarter of last year -- plummeted to $309 billion. It's a sharp sequential drop, and revenue fell well short of expectations. Net revenue of $1.165 billion was less than half of what it generated in the fourth quarter, but also 27% below where it landed a year earlier. Coinbase also stunned investors with a quarterly loss.
With assets on platform and monthly transacting users sliding sequentially, momentum isn't kind. Recent drawdowns in crypto make it hard to get excited about the current quarter. Goldman Sachs would go on to downgrade Coinbase following the report, and several other analysts slashed their price targets on the stock.
