Cathie Wood is hoping to catch 2020 in a bottle again. The co-founder, CEO, and lead stock picker of Ark Invest delivered jaw-dropping returns two years ago across her family of funds, but her stock-picking skills have proven mortal in 2021 and 2022. Can she get back on track in 2023?
Wood added to just a couple of her positions on Wednesday. Coinbase (COIN -2.31%), Tesla (TSLA -1.06%), and Verve Therapeutics (VERV -5.60%) are three of the four stocks that Ark Invest was buying yesterday. Let's take a closer look at her shopping cart.
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Coinbase
Wood has a "buy the dip" mentality for some of her largest holdings, and that's certainly the case for Coinbase. She has been nibbling on the leading cryptocurrency trading platform lately, with the shares 89% below the the all-time highs they reached 13 months ago. Coinbase hit another all-time low on Tuesday.
This year has certainly been a tumultuous one for crypto. Prices for most digital currencies have plummeted, and the downticks have intensified as once-popular cryptocurrency platforms including FTX and Celsius Network have collapsed. Coinbase can rightfully argue that it has a strong balance sheet and doesn't engage in the risky business practices of its fallen peers, but with regulators starting to crack down on the industry and crypto prices diving, it's hard to make a living as a trading platform.
Coinbase CEO Brian Armstrong said that revenue will be less than half the $7.8 billion it recorded last year in a recent interview with Bloomberg. The implication in last week's interview is that the current quarter will be rough. If you're looking for a silver lining, KeyBanc analyst Alex Markgraff initiated coverage of the stock with a sector weight rating on Monday. A neutral market call may not seem very inspiring, but it's a welcome break from the flurry of downgrades and price-target slashing that we've seen over the past few months.
Tesla
Remember when folks thought that Elon Musk paid too much when he and his fellow investors shelled out $44 billion for Twitter? The real pain is being felt by Tesla investors, as that stock has seen its market cap surrender $215 billion in value since the Twitter deal closed on Oct. 27. You can say that the two data points aren't related, but Tesla's CEO has become a more polarizing figure since amplifying his voice with controversial tweets on the social media platform he now owns.
Tesla didn't help its own fortunes with a poorly received quarterly report just a couple of days before closing on the Twitter deal. Sales are still growing, but the market's concerned with rising inventory levels and the eroding of gross margin. Remember when you had to wait months for a new Tesla? You can still order a Model 3 or a Model Y today with an estimated delivery by the month's end.
Verve Therapeutics
Ark Invest has taken a shine to Verve Therapeutics this month. It has added to its stake for eight consecutive trading days. Some days it's been the only position -- or just one of two positions -- that Wood has added to her portfolios.
What makes Verve so special? It's developing a gene-editing platform that works inside the body. It will initially tackle liver diseases. Its lead candidate is VERVE-101, aiming to lower low-density lipoprotein (LDL) cholesterol -- the so-called "bad" cholesterol -- by silencing the protein that limits the liver's ability to handle LDL cholesterol.
Early-stage treatment developers are risky, with high potential upside. Beyond the substantial losses, Verve has yet to generate any kind of meaningful revenue. However, the stock has more than doubled since bottoming out in June. It received industry affirmation over the summer after striking a deal with Vertex Pharmaceuticals (VRTX -0.27%), a four-year arrangement where the two companies will partner on a gene-editing approach that will tackle an undisclosed liver disease. It can result is an as much as $406 million in milestone payments and royalties for Verve it it pans out. That's a good chunk of change for Verve Therapeutics with its current $1.4 billion market cap.
Coinbase, Tesla, and Verve Therapeutics 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 partying like it's 2020 with Ark Invest in 2023.
