Following prominent investors is nothing new. For years, people have kept an eye on what stock market pros like Warren Buffett, Ray Dalio, and others were buying.
In recent years, Cathie Wood, CEO of ARK Invest, rose to prominence as her ARK Innovation exchange-traded fund (ETF) skyrocketed in value with timely investments in companies like Tesla, Roku, and Coinbase Global.
Wood was active in August, adding to several long-standing positions in the ARK Innovation ETF. Let's look at two in particular: Roblox (RBLX 6.57%) and Twilio (TWLO +2.17%).
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1. Roblox
The ARK Innovation ETF holds about 6.8 million shares of Roblox, worth about $281 million. Wood added over 147,000 shares on Aug. 10. It is now the ETF's 18th-largest position overall.
Roblox operates an online gaming community where players build "worlds," collect items, and interact with fellow gamers. The company generates revenue by selling Robux, a virtual currency that can be traded for in-game items, power-ups, and other collectibles. Roblox boomed in popularity during the height of the pandemic, when schoolchildren flocked to the game.
NYSE: RBLX
Key Data Points
Yet, even as pandemic restrictions have waned, Roblox has continued to add users. July daily active users (DAUs) jumped to a record high of 58.5 million, a rise of 26% from a year earlier. What's more, the company is still growing revenue at 30% year over year -- down from the lofty highs of 2021 but still impressive.
RBLX revenue (quarterly YOY growth). Data by YCharts. YOY = year over year; TTM = trailing 12 months.
Like many of the companies favored by Cathie Wood, Roblox is investing for the future. It has spent more than $700 million on research and development during the last 12 months alone. With over $3 billion of cash on its balance sheet, no net debt, and positive free cash flow, the company can afford to invest for the future.
For market participants willing to play the long game, Roblox is a name that could add some growth to an investment portfolio.
2. Twilio
Another stock that Wood has been adding in August is Twilio. The ARK Innovation ETF snapped up 592,000 shares between Aug. 6 and Aug. 10. It's now the fund's seventh-largest position, with over 5.4 million shares valued at about $394.5 million.
Twilio, a cloud communications provider, has endured a rough 2022. Like Roblox, the stock surged during the pandemic but has since come back to Earth. Shares are down 71% this year alone.
NYSE: TWLO
Key Data Points
Nevertheless, Wood clearly sees the long-term potential in Twilio's business model. The company's communication software helps its customers stay in contact with users through various methods. In today's busy world, Twilio's software helps businesses like Airbnb and Lyft connect quickly and seamlessly to end users via mobile apps.
And while its stock price has struggled, the company's growth rate remains strong. Quarterly revenue grew 41% in its most recent quarter to a record $943 million. Analysts expect full-year revenue to surpass $3.8 billion in 2022 and $4.9 billion in 2023.
TWLO revenue (quarterly YoY growth). Data by YCharts.
That said, Twilio remains a volatile growth stock. If you, like Cathie Wood, are willing to ride out the ups and downs that come with growth investing, Twilio could be the type of company that could make you rich.
