Cathie Wood, the CEO of Ark Invest, made her name by embracing innovative businesses in the early stages of their life cycle. If you've been paying attention to the stock market lately, you know that up-and-coming technology stocks have been under a lot of pressure.
Despite prices that are sinking in the present, Wood thinks there could be big gains down the road for savvy tech stock investors who wait out the storm. Here are three stocks that are more than 77% below the peak prices they reached last year. Here's why Wood's convinced they can outperform over time.
UiPath
Wood has been a big fan of UiPath (PATH 0.77%) since its stock market debut in April of 2021. Unfortunately, shares of this enterprise automation business have been hammered down around 78% from their post-IPO peak.
Ark Invest's exchange-traded funds (ETFs) have been buying up more shares of UiPath stock at beaten-down prices. Now, it's the seventh largest holding in the flagship Ark Innovation ETF.
By emulating human clicks and keystrokes, UiPath's robotic process automation (RPA) platform brings the benefits of automation to office employees, even if they lack programming skills. For example, corrections departments in the Netherlands use UiPath's robots to fill out forms so employees have more time to actually rehabilitate the convicted.
Businesses eager to retain talented employees are beating a path to UiPath's door. During its fiscal first quarter ended April 30, revenue rose 32% year over year to $254 million.
Information technology professionals enjoy using UiPath but you don't need to be a programmer to put the platform to good use. This is a big advantage UiPath has over its competitors in the RPA industry. With the leading platform for people who can't program their way out of a wet paper bag, investors can look forward to a rapidly expanding customer base for the foreseeable future.
Roblox
Wood was eager to buy up shares of Roblox (RBLX -3.66%) late last year when it was trading near its all-time high. The stock has tumbled 79% from its peak, but that hasn't stopped Ark Invest from buying more shares of this metaverse stock with confidence.
Roblox is all about individual gamers creating their own games, which is a lot more popular than you might expect. There were 54.1 million daily active users on Roblox in the first quarter which was 28% more than the previous year's period.
The stock has been tanking because not as many parents are scrambling to find ways to keep their children entertained all day while they try to work from home. The important thing to remember here is that those kids will eventually get their own jobs.
As the age range of Roblox's customer base expands, opportunities for monetization also improve. For example, this March, Sony, and Roblox teamed up to host a live concert with 24kGoldn, a multi-platinum artist who grew up with Roblox. Concert sizes are traditionally limited by venue sizes and geography. These aren't constraints in a virtual setting. Expect more artists who are eager to sell virtual merchandise to millions of fans at a single event to start holding virtual concerts on Roblox in the future.
Roku
Roku (ROKU 0.15%) has tanked about 83% from the high water mark it set in 2021. The dramatic losses haven't darkened Wood's expectations for this streaming stock and its long-term future.
Now that we're spending less time in our homes, usage of Roku-enabled devices isn't growing quite as quickly as it did a year earlier. Despite the challenges, Roku's still growing pretty fast. The company racked up 20.9 million streaming hours in the first quarter, which was 14% more than it recorded in the previous year period.
More hours of engagement mean more revenue and serving targeted advertisements to connected televisions is an increasingly lucrative business. Average annual revenue per user soared 34% year over year to $42.91 in the first quarter.
Big brand advertisers are still shifting their budgets away from broadcast television and toward ad-supported streaming platforms. As America's largest streaming platform by hours viewed, Roku is in the right place at the right time and Wood knows it.
