The past two years have been brutal for Cathie Wood and the Ark Invest family of exchange-traded funds that she runs, but she's been going on a buying spree as 2022 comes to a close. She's been adding to some of her hardest-hit stocks lately, and that was certainly the case on Thursday.
Tesla (TSLA -1.11%), Roblox (RBLX 1.35%), and DraftKings (DKNG 4.96%) are three of the existing Ark Invest positions that Wood added to yesterday. Let's take a closer look.
1. Tesla
The company that made electric vehicles cool finds itself in an unusual place as we tie a bow on 2022. The same flashy darling that earlier this year had folks waiting months for a new car because it couldn't keep up with demand despite pushing through price hikes finds itself going the other direction now. Tesla began offering buyers that took possession of a new Model 3 or Model Y before year's end a $3,750 price reduction earlier this month. Last week it bumped the incentive to $7,500, along with 10,000 miles of free Supercharger access.
Image source: Getty Images.
Whether Tesla is trying to clear out a rare glut of inventory or dealing with buyer cancellations on economic or Elon Musk concerns, it's not a good look. The stock is down 65% this year.
The good news is that analysts still see revenue growing 37% next year, a refreshing break from the sub-4% growth that Wall Street is modeling for the country's two larger automakers by volume. Bottom-line forecasts for 2023 have been moving lower in recent months, but you can still buy Tesla for a reasonable 23 times forward earnings.
2. Roblox
Many of the initial stars of the 2021 IPO class have fallen hard this year, and Roblox is no exception. Shares of the company behind the immersive online gaming platform have plummeted 74% in 2022.
There are concerns that the popularity of Roblox is waning, despite entertaining a record 58.8 million average daily active users in its most recent quarter. The open-ended hub for players and programmers has experienced a sequential decline in bookings for the past two quarters, and the current quarter isn't shaping up to be any better. The stock took a hit after the company reported disappointing metrics for November. Its daily active users base contracted to 56.7 million. Average bookings per daily active users declined sequentially and year over year last month.
A lull in engagement and popularity doesn't mean that we hit peak Roblox earlier this year. Platforms can bounce back. We know how Wood thinks this story will play out, as she's added to her Roblox stake a couple of times this month.
3. DraftKings
Wood also placed a fresh bet on DraftKings on Thursday. The online sports wagering player with a penchant for fantasy sports is the relative winner of the 2022 derby among these three stocks. It's down only 59% this year.
After years of accelerating top-line gains, DraftKings was starting to see its business slow down early in 2022. Here's how the scintillating revenue gains fared since 2018:
- 2018: 18%
- 2019: 43%
- 2020: 90%
- 2021: 111%
We saw year-over-year growth slow to 37% in the first quarter, recovering to a 57% increase in the second quarter. Then DraftKings came through with a 136% surge in revenue for the third quarter, fueled by the rollout of its sportsbook and iGaming products in freshly legalized markets. However the stock took a hit following that report, as it was accompanied by projections for a growth slowdown.
DraftKings remains a uniquely positioned sports betting stock. It has been able to woo new sports fans after striking partnerships with leagues, teams, and even sports broadcasting networks. There will always be regulatory hurdles to clear as it enters new territories. It announced on Friday morning that it expects to launch in Ohio over the weekend. If you feel that sports wagering will continue to grow in popularity, DraftKings is a high-risk play with a potentially big payoff if it's on the winning team.
