Cathie Wood is enjoying her comeback year. The founder, CEO, and chief investment officer of Ark Invest isn't back to her blowout performance of 2020, but after back-to-back years of brutal returns, Wood is beating the market again in 2023. Her flagship fund is up 22% this year.
What is she buying these days? Ark puts out its daily transactions. She added to her positions in Block (SQ -1.68%), Genius Sports (GENI -1.15%), and Teladoc Health (TDOC -2.91%) on Monday. Let's take a closer look.
1. Block
Wood's feast and famine over the past couple of years parallels the highs and lows of fintech, in general, and Block, in particular. Investors poured into the the next-gen players that are making digital payments accessible to the masses in 2020.
The company formally known as Square saw its stock more than triple in 2020. It would go on to give it all back in the two subsequent years, but it's beating the market so far this young year with a 19% gain.
Block's CashApp is thriving as a payments app. It begins this year with 51 million monthly transacting actives, 16% more than it had on its platform a year earlier. The original Square ecosystem, which helps merchants large and small process credit card transactions, is also holding up well. Gross profit for Square rose 30% in 2022, even as the stock went the other way.
Image source: Block.
Even Block's crypto business -- a drag on its performance, as Bitcoin (BTC 0.17%) fell out of favor last year -- has been a good place to be in 2023. The leading cryptocurrency has soared nearly 70% this year, moving even higher this month as an ironic flight to quality when traditional banks started to buckle.
Block still has a long way to go in its recent redemptive path. The shares are still 74% below their peak two summers ago. Wood relishes buying quality growth stocks at opportunistic price points. She seems to have that with Block at this time.
2. Genius Sports
If you think Block's 74% slide from its 2021 all-time high is amazing, Genius Sports has it beat, with an 84% plunge since its peak nearly two years ago. The company is a provider of data and software solutions for the gambling, sports, and media industries. Interest in live sports has recovered to pre-pandemic levels, and Genius Sports would seem to be a logical beneficiary.
The company is the stat-keeping partner of many teams and even entire leagues. It has data that fans, gamblers, and media outlets need.
Revenue has risen at least 30% in each of the past four years, including a 76% top-line surge in 2021. A lack of profitability has kept it out of favor, but it's getting better on that front. Analysts see Genius Sports posting a profit on an adjusted basis next year.
3. Teladoc Health
Things can get worse than being a shareholder of Block or Genius Sports at an all-time high. Teladoc Health has plummeted 92% since its early 2021 peak. Wood doesn't mind. She added Teladoc to four of Ark Invest funds on Monday.
Teladoc is a pioneer in telehealth, and it was an early darling during the COVID-19 crisis. Virtual medical consultations were necessary when in-office visits weren't safe, and Teladoc's business took off.
Things are different now, and growth is decelerating. Teladoc's revenue rose 18% in 2022, a far cry from the 98% and 86% increases it pulled off in the two previous years. Guidance in 2023 calls for a 6% to 11% move higher in revenue.
Losses continue, and Teladoc announced layoffs earlier this year. There's still a place for telemedicine stocks in the new normal, but competition has gotten more intense, with players scrambling for market share in a period of slowing industry growth. Despite the stock's massive slide over the past two years, Teladoc joins Block as one of Wood's 10 largest holdings across the Ark Invest funds.
