It's been a good quarter for Cathie Wood, recent volatility notwithstanding. The widely followed founder, CEO, and chief investment officer for Ark Invest is riding high in 2023, a sharp contrast from her returns the last two years after a blowout 2020.
She posts her transactions at the end of every trading day. What did she buy on Thursday? She added to her existing positions in Coinbase Global (COIN -5.10%), Nextdoor (KIND -1.86%), and Teladoc (TDOC -0.07%). Let's take a closer look at her latest haul.
Coinbase Global
It was a rough Thursday for Coinbase shareholders. Shares of the leading cryptocurrency exchange plummeted 14% after the SEC sent it a Wells Notice, potentially seeking enforcement action on alleged violations of federal securities laws. Coinbase has historically been one of the more conservative platforms, but regulatory risks were always on the table.
Several analysts chimed in with concerning notes about the development, including Owen Lau at Oppenheimer who downgraded the shares from outperform to perform. Lau -- and most analysts covering Coinbase -- still believe in blockchain technology and the development of digital assets. However, after a recent surge in cryptocurrencies it seems as if regulators want the industry on a shorter leash.
Image source: Getty Images.
There's a lot at "stake" for Coinbase if regulatory changes or SEC enforcement action eat into the revenue that the exchange is currently generating from alt coin trading and offering its users staking rewards. Despite the slide, Coinbase stock is still up a scorching 87% in 2023.
Question marks and dark clouds aren't good looks for one of this year's most surprising market beaters. The upside could be limited in the near term until the matter is resolved, but Wood doesn't have a problem buying a stock on a day when it's down substantially.
Nextdoor
If you're not an active member of the Nextdoor community, there's a good chance that one of your neighbors is a regular. Nextdoor operates a discussion board with a hyperlocal focus. Register for a free account on the ad-supported platform and you'll be whisked away to a world of missing pets, locals seeking referrals for service pros, and a fair amount of bickering on local hot topics. Is it too late for Nextdoor to change its ticker symbol from K-I-N-D?
It's not just the platform itself that sometimes fails to live up to its ticker symbol. The stock chart itself is not K-I-N-D, largely because its recent financial performance has been unkind.
Revenue declined 10% for its latest quarter. Folks are still flocking to the basic community hub. Its audience has climbed 11% to 40 million weekly active users over the past year. Like many free platforms at the mercy of ad revenue, Nextdoor is suffering from marketers paring back their expenditures until they see the economy moving in the right direction.
Time is on Nextdoor's side given its cash-rich balance sheet. Its market cap of $734 million is actually more than three times greater than its enterprise value. It has time to both get it right and eventually turn a profit. Investors just aren't very excited about Nextdoor's near-term prospects, but that's not stopping Wood from adding to her stake in the company.
Teladoc
Despite the brutal stock chart -- Teladoc is down more than 90% since peaking two years ago -- the telehealth pioneer is still growing. Teladoc's revenue rose 18% last year, including a 15% year-over-year increase in its latest quarterly report. Growth will continue to decelerate. The midpoint of its top-line guidance for 2023 calls for an 8% to 9% gain.
The real culprit that's keeping Teladoc back is its lack of profitability. Analysts see the losses continuing for another three years.
Credit Suisse analyst Jonathan Yong recently lowered his firm's price target on the shares to $27, implying limited upside from current levels. Yong is concerned that Teladoc will be challenged to get the balance right between growth and cost reductions. It already announced layoffs in January, and the market for providing virtual medical consultations is heating up for telemedicine stocks.
