Cathie Wood didn't head into the holiday weekend empty-handed. The CEO, founder, and chief investment officer of Ark Invest made some portfolio moves on Friday, adding to three of her existing positions.
What did she buy on the final trading day of last week? Wood put more money to work on Shopify (SHOP 3.42%), UiPath (PATH 0.93%), and Archer Aviation (ACHR -1.25%). Let's take a closer look at why she added to these three existing portfolio positions.
1. Shopify
Shopify is one of Wood's largest market bets. It's the eighth-largest holding across the Ark Invest family of exchange-traded funds. She had no problem adding more Shopify to three of her funds on Friday after the company reported mixed financial results the day before.
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Shares of Shopify plummeted 16% on Thursday following the company's disappointing fourth-quarter report. Revenue rose a better-than-expected 26% for the holiday-potent quarter. It reported small profit on an adjusted basis, but that was just ahead of what Wall Street was targeting.
There was some weakness within the seemingly solid results. A 24% increase in gross payments is respectable, but seeing gross merchandise volume climb a mere 13% on the e-commerce platform is problematic. It gets worse, as monthly recurring revenue rose just 7% and gross margin contracted from a year earlier.
The real dagger in the report was guidance. Shopify sees top-line growth slowing to the high teens for the current quarter. Analysts were hoping for a 19.6% increase. Sure, that is technically in the "high teens" territory, but for a stock that is trading at a rich revenue multiple with decelerating growth, it's going to be a hard sell when it proves mortal the way it did late last week.
Shopify is trying to deal with the new reality. It joined other tech giants in announcing layoffs this past summer. The company that had ambitious growth projections early in the pandemic -- and began to invest aggressively in growing its offerings -- is now dialing things back.
2. UiPath
Robotics and automation in the workplace is an undeniable trend. The cost of human labor keeps rising, and the efficiency of automated solutions keeps improving. There's no downtime for turnover and training because robots don't quit. Automated assembly lines also don't get sick or ask for time off for vacation or other life matters.
Automation isn't perfect, but that's also why UiPath is stepping up as a leading provider of enterprise software solutions for businesses looking to invest in robotics for the workplace. UiPath impressed investors with its fiscal third-quarter results two months ago. Annual recurring revenue soared 36%, and its reported revenue topped expectations with a 19% ascent.
UiPath's dollar-based net retention rate is currently checking in at 126%. Put another way, returning customers are spending 26% more on the platform than they were a year earlier.
UiPath also keeps improving its product. Last month, it unveiled significant upgrades that streamline migration and make comprehensive software testing natively available to all of its clients.
3. Archer Aviation
Electric cars are cool, but what if they could fly and go faster? Archer Aviation is a publicly traded player making a dent in the nascent market for electric vertical take-off and landing (eVOTL) aircraft. Archer's aircraft is an airplane/helicopter hybrid, designed to cover short distances because it's battery powered.
Late last year, Archer turned heads when a major legacy carrier made a deposit of for 100 Archer aircraft that it expects to use as a premium add-on for travelers willing to pay up to get from Newark Liberty International Airport to the Downtown Manhattan Heliport in a manner of minutes.
The rollout of Archer's fleet is still at least two years away. It has yet to post actual revenue, and the losses have understandably been substantial.
It's also not the only player in this niche. In fact, Wood has an even larger position in Blade Mobility that specializes in offering luxury helicopter and seaplane transportation in traffic-dense metropolitan cities. It may take some time for Archer Aviation's financials to take off, but Wood is an early and frequent flyer.
Shopify, UiPath, and Archer Aviation are intriguing additions to Wood's shopping list on Friday. It will be interesting to see if she continues loading up on these rebounding growth stocks.
