It was a rough two years for Cathie Wood, but the Ark Invest founder, CEO, and money manager is bouncing back in 2023. Her family of growth-oriented exchange-traded funds is rolling again.
Wood's transparency finds Ark announcing all of its daily transactions. She added to existing positions in Roblox (RBLX 6.57%), Velo3D (VLD +10.06%), and Twist Biosciences (TWST 2.89%) on Monday. Let's take a closer look.
NYSE: RBLX
Key Data Points
1. Roblox
Many of last year's hardest-hit stocks are showing signs of life in 2023. Roblox is one of them. The company behind the immersive online gaming platform saw its stock plummet 72% in 2022. The shares have risen 35% so far this year.
Profitless growth companies fell out of favor last year, and Roblox had its own demons to deal with. The popularity of the platform started to falter, and monetizating its audience was even more challenging. It has fallen well short of analyst bottom-line estimates in each of its past four quarters.
Image source: Getty Images.
Things continued to get worse near the end of last year, especially after the open-ended hub for players and programmers posted back-to-back quarters of sequential declines in bookings. Roblox delivered bad news in mid-December, when it delivered its update for November and noted that its daily active user base contracted to 56.7 million. Had Roblox peaked in usage in early 2022? Thankfully for its shareholders and online community, that wasn't the case.
Metrics for December that were made public three weeks ago were mixed, but ultimately encouraging. The number of daily active users clocked in at 61.5 million. A sequential uptick makes sense over the holidays, but this is a record audience that's 18% larger than where it was a year earlier.
Hours engaged rose 21% to 4.7 billion. Expressed a different way, with usage outpacing user gains, the average active user is spending more time on the platform.
Monetization, though, remains tricky. Revenue for the month came in at a slight decline from the prior year's month. Bookings are up nicely, but flat on a per daily active user basis.
Roblox will put the last three months of 2022 together when it announces its quarterly results next week. There are signs of a turnaround, and a strong report tethered to upbeat guidance will confirm the recovery.
NASDAQ: VLD
Key Data Points
2. Velo3D
You may not know a lot about Velo3D, but Wood is thinking about the 3D printing stock a lot lately. She has added to her position in Velo3D for six consecutive trading days. Velo3D makes a line of sophisticated metal printers, allowing companies in the aerospace, aviation, industrial power, and oil and gas industries to manufacture mission-critical parts in-house.
Velo3D is a small low-priced stock, but it turned heads early last year with its ambitious projections. After it delivered a mere $27.4 million in revenue for all of 2021, it was eyeing $89 million on the top line for 2022. A business that's more than tripling is always going to be impressive, but it's been susceptible to companies that are more cautious about their big-ticket purchases. It hosed down its revenue outlook in early December and is now modeling between $75 million and $80 million in revenue when it makes 2022's financial results official.
You have to go back to mid-September to find the last time Wood went on this kind of buying spree, picking up Velo3D stock six times through a seven-trading day run. The stock didn't rally then. The key to a comeback this time will rest on a return to raising guidance in 2023.
NASDAQ: TWST
Key Data Points
3. Twist Biosciences
Ark tends to add to positions when there's a fire sale, and we saw that happen at the end of last week, when Twist Biosciences posted fiscal its fiscal 2023 first-quarter results.
Shares plummeted 18% on Friday after the maker of synthetic DNA offered up uninspiring guidance. It continued to sell off this week, dropping another 6% on Monday. Wood added to her Twist Biosciences position on Friday and took an even bigger bite on Monday.
Last week's report wasn't bad at first glance. Revenue for the quarter rose 29%, just ahead of Wall Street's target. Its loss narrowed, and that deficit was kinder than expected. The rub was Twist's outlook calling for $56.5 million in revenue for the current fiscal second quarter. Wall Street pros were holding out for $61.9 million.
It can be feast or famine for volatile life sciences stocks. In Wood's going to feast if it's a stock she already believes in and owns.
