Cathie Wood is feasting in 2023. The founder CEO and ace stock picker at Ark Invest is seeing double-digit percentage returns across her family of the exchange-traded funds in January. Can she keep it going?
Wood announces all of Ark's daily transactions. She added to existing positions in Roku (ROKU 1.45%), Velo3D (VLD 4.53%), and Teladoc Health (TDOC 3.97%) on Monday. Let's take a closer look.
NASDAQ: ROKU
Key Data Points
1. Roku
We're spending more time than ever streaming TV these days, but you wouldn't know it going by Roku's stock chart. Shares of the streaming video pioneer are trading 89% lower than their peak set two summers ago.
Image source: Getty Images.
Roku itself is still growing. It recently announced that it closed out 2022 with more than 70 million active accounts, at least 16% more than it was entertaining at the beginning of the year. Folks with a smart TV that comes with the Roku operating system built in or that buy a dongle to plug into their set are spending a lot of time on the platform. The 23.9 billion hours collectively streamed through Roku in the last three months is a 19% increase over the fourth quarter of 2021.
Why isn't the stock doing better? It's a fair question, and we can start with the bottom line. Roku turned a profit in the second half of 2020 and for all of 2021. It's been delivering record deficits through 2022. Subsidizing its hardware in a highly competitive market and investing in original content has decimated Roku's profitability. There were supply chain constraints initially in the downturn of the bottom line, but it's clearly more than that now.
Roku's latest guidance is also problematic. Since growth and engagement are holding up well, the weak near-term outlook implies that ad revenue per user is going to take a big hit when Roku reports fresh financials in February.
NASDAQ: VLD
Key Data Points
2. Velo3D
Revenue gains have slowed for one of the fastest-growing 3D printing stocks, but it's hard to complain after the 119% year-over-year top-line surge that Velo3D posted in its latest quarter. Velo3D is the smallest stock of the three on this list, but it does some pretty big things. It makes provides additive manufacturing solutions for the aerospace, aviation, industrial power, and oil and gas industries.
Velo3D's flagship product is its Sapphire line of metal printers. It helps businesses create industrial metal parts on-site, cheaper and faster than they would if they had to source them in the third-party market. If a single part is holding up an assembly line or an operating function, you can be sure that time is everything. The printers aren't cheap, but neither is a prolonged work stoppage.
We're still in the early stages of Velo3D's growth cycle. Revenue did more than double in its latest quarter, but revenue was just $19.1 million. It was also below Wall Street expectations and resulted in Velo3D lowering its full-year guidance. It had been targeting $89 million in revenue for all of 2022 through most of the year before checking that down to between $75 million and $80 million at the time of its disappointing third-quarter release in November.
The company also announced plans to raise money through a mixed-securities shelf offering, a bad look just days after the stock tumbled on its dimmer outlook. It has an essential role in 3D printing of metal parts, with an impressive list of clients. It just can't afford to fall short again when it reports fourth-quarter financials in a few weeks.
NYSE: TDOC
Key Data Points
3. Teladoc Health
Wood has prescribed herself a pretty steady dose of Teladoc Health. She has now added to her position in the telehealth specialist in three of the past six trading days. Like Roku, the shares sharply lower since hitting all-time highs in 2021. Teladoc's 91% drop since its peak is worse than Roku, but both stocks have been on the upswing lately, with double-digit percentage gains in January.
Teladoc is still seeing its business of providing virtual medical consultations grow. Revenue rose 20% through the first three quarters of 2022, including a 17% increase in its most recent report. The top-line gains will continue, but -- also like Roku -- the losses are becoming too much to bear for investors. It announced layoffs earlier this month. With competition heating up for telemedicine stocks, it may have to make some more incisions to its cost structure to return as a healthy market darling.
