"I'm only happy when it rains," sang alternative rock band Garbage in the 1990s, and it's fair to say that Cathie Wood feels the same way. The co-founder, CEO, and chief stock picker of Ark Invest is a growth stock investor, but she also seems to be making opportunistic purchases when her holdings go the wrong way.
Ark Invest only added to a couple of its position on Wednesday. Velo3D (VLD -2.47%), Tesla Motors (TSLA 4.96%), and Coinbase (COIN -0.34%) were three of Wood's more interesting buys. Let's take a closer look at her shopping cart.
Image source: Getty Images.
Velo3D
You can carve a cozy living catering to a thin but big-ticket niche. Velo3D isn't a household name, but the 3D printing company is helping the aerospace, aviation, industrial power, and oil and gas industries out with its line of metal printers. Velo3D's Sapphire printers allow companies to create replacement parts in-house, getting them going again faster and cheaper than leaning on third-party vendors.
The stock took a hit earlier this month following what seemed like a rough quarter on the surface. Revenue soared 119% to hit $19.1 million, but that was short of the $24.2 million that Wall Street was forecasting. Its adjusted loss of $0.12 a share was also slightly worse than expected. Velo3D also hosed down its guidance for all of 2022, going from its earlier forecast for $89 million in annual revenue to a range of $75 million to $80 million.
Velo3D blames shipment delays for the quarterly shortfall and revised outlook. It may seem odd to see a company that prides itself on the cost-effective generation of mission-critical components playing the supply chain shortages and production constraints cards, but it's fair. It's not as if a Sapphire XC printer can make itself or whip up the input materials out of thin air.
The upside potential is still huge. The $24 million to $29 million it now expects to generate in the fourth quarter is roughly the $27.4 million it delivered for all of last year. Velo3D continues to win new customers, booking $27 million in new orders during the third quarter, pushing its order backlog to $66 million. Wood apparently sees a buying opportunity with the stock's 37% drop this month.
Tesla Motors
If you think Elon Musk overpaid when he and his fellow investors paid $44 billion for Twitter, keep in mind that Tesla has surrendered more than $120 billion in market cap since the Twitter deal closed on Oct. 27. The maker of next-gen electric vehicles has struggled as its CEO spends the lion's share of his time on the social platform.
Tesla has also had issues with its autonomous-driving platform. The global economy is getting wobbly, and that's not a well-paved road for the sale of high-end cars. It's also not easy for any business for which China is the second biggest market.
There's gold in the silver linings. Musk said earlier this week that he plans to find a new CEO for Twitter. Tesla cars continue to be electric vehicle of choice, and the current climate of stiff gas prices is a dinner bell for Tesla pre-orders. Inventory levels rising and gross margin contracting wasn't a good look for its latest quarter, but the company remains an undeniable leader in a niche that will continue to grow its share of the automotive market.
Coinbase
Traders on crypto platforms are dealing with confidence-rattling collapses. The failure of FTX earlier this month was huge, and this week we see fellow exchange Gemini pausing withdrawals and its income-generating Earn program on liquidity concerns.
Coinbase is better situated than its fallen peers. The leading cryptocurrency platform argues that it has a sound risk management program and strong capital position. It has a strong cash-rich balance sheet, and it never chased the speculative offerings with unsustainable promises of high yields on staked digital currencies. The rub is that there's no point in being the last major crypto exchange left standing if there's no one trading.
Coinbase has seen its trading volume monthly transacting users plummet. Customer assets on the platform are a third of what they were when the year began. Coinbase has the financial fortitude to stick around, but things look foggy as we look out for potentially bullish catalysts. If it succeeds, it will benefit from a lack of competitors, but it's a big gamble now.
Velo3D, Tesla Motors, and Coinbase are all trading well below their highs, but they're all still compelling growth stocks. Now it's time to see if investors will be as happy as Wood when it rains -- or if that was all just some 1990s Garbage.
