Growth stocks are bouncing back in 2023, and that finds Cathie Wood's growth-investing style back in fashion. The CEO, founder, and primary analyst at Ark Invest is seeing her firm's exchange-traded funds (ETFs) start rolling again this year after back-to-back years of devastating declines.
Ark Invest provides daily transaction updates, so we know what she's buying and selling on any given day. Some of the names that Wood bought on Wednesday include Tesla (TSLA 2.60%), Cerus (CERS +1.19%), and Invitae (NVTA +0.00%). Let's take a closer look at her new moves.
NASDAQ: TSLA
Key Data Points
1. Tesla
If there is one position that Wood has been adding to consistently over the past couple of months, it's Tesla. She's been adding as the stock has been sliding, and she hasn't stopped now that it has shifted out of reverse this year.
Tesla is trading slightly higher in 2023 -- up nearly 5% year to date -- and that might seem surprising gven all the negative developments over the past month alone.
- December began with potential U.S. Tesla buyers being offered a $3,750 rebate if they took delivery before the end of 2022. The discount doubled to $7,500 on Dec. 21.
- Despite the significant and eventually widening discounts, the company reported weaker-than-expected deliveries for the fourth quarter in early January.
- A second price cut in China over the last 90 days spurred recent buyers to protest at Tesla showrooms in the world's most populous nation. Angry customers and falling margins are not an attractive combination.
- Just when prices seemed to stabilize in January at the end of the rebate, Tesla slashed prices by as much as 20% for certain models, a move to get the vehicles in line to receive electric-vehicle tax credits but also devaluing the resale value for all existing owners.
Image source: Getty Images.
Investors bracing for a challenging fourth quarter when Tesla reports next week now have to worry about the impact on margins for the quarter that just began. Tesla is still growing -- and that's important -- but slashing prices to improve a shortfall on demand comes at a price.
NASDAQ: CERS
Key Data Points
2. Cerus
Wood isn't afraid to dabble in low-priced stocks, and not just because she was a fan of the investment when it was trading substantially higher. Three of the five positions she added to on Wednesday are trading for less than $4 a share. Cerus is one them.
This biotech is championing blood safety through its Intercept system, which reduces pathogen loads in different blood components. The stock has been trading in the single digits for more than 14 years, longer than the existence of the Ark Invest ETFs.
Cerus isn't some early-stage player with nonexistent revenue. The $157.9 million in trailing-top-line restults might not seem like much, but it just completed what should be its sixth consecutive year of double-digit revenue growth.
It is not currently profitable, but it does have more cash than debt on its balance sheet. This isn't a huge addressable market, but if Cerus can keep growing to the point where it becomes the industry standard in blood safety, it could top $1 billion in annual sales in a few years.
OTC: NVTA
Key Data Points
3. Invitae
Outside of adding more Tesla shares to a couple of her most popular ETFs, Wood made most of her moves on her fund that is focused on next-gen genetics. Invitae joins Cerus in that camp, and it's the lowest-priced addition after its $2.58 close on Wednesday.
Unlike Cerus, whose stock price hasn't been able to crack into the double digits since 2007, Invitae was there a year ago. The stock has plummeted more than 95% since peaking in late 2020.
The medical genetics specialist is also not an early-stage player. It has reported double-digit (if not triple-digit) revenue growth for the past eight years. The top-line gains have decelerated lately, down to the high teens in the last three quarters.
Its balance sheet is also more debt-heavy than Cerus, making large losses more problematic in this climate of rising borrowing costs. With the stock down sharply, Wood likely knows the risks but appreciates the upside if Invitae can stand out among genetic-testing stocks over time.
