Growth investing has had a resurgence in 2023, and Cathie Wood has been a major beneficiary. Ark Invest founder, CEO, and money manager Cathie Wood is bouncing back in 2023, following a rough 2021 and 2022 after a breakout 2020. Her family of growth-oriented exchange-traded funds is moving in the right direction again.
Wood's transparency finds Ark announcing all of its daily transactions. She added to existing positions in Roblox (RBLX -2.25%), Coinbase Global (COIN 2.01%), and Twist Bioscience (TWST -0.73%) on Monday. Let's take a closer look.
1. Roblox
Wood doesn't flinch when some of her favorite stocks go on sale, and she's had plenty of opportunities to build up her position in Roblox. The company behind the interactive online gaming platform has moved higher this year, but it's still a blistering 72% below its peak in late 2021.
The latest hit came last week, when Roblox posted disappointing gaming metrics for the month of March. The 66.2 million in daily active users it entertained last month was a 26% year-over-year increase, but it was a sequential dip from the 67.3 million it hosted in February. Estimated revenue didn't keep up with the audience, and estimated average bookings per daily active user were flat to slightly lower than a year earlier.
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D.A. Davidson analyst Franco Granda offered hope for investors after last week's update. The first quarter's bookings may have missed consensus estimates, but foreign exchange headwinds also held back reported results. Granda feels that the stock's 12% hit on the news provides investors with an attractive entry point. The stock's $55 price target implies 41% of upside from current levels.
The lack of profitability and challenges to monetizing its audience continue to weigh on Roblox. Analysts see losses continuing through at least 2027. Things can change for the better if the user count begins to grow briskly and engagement levels trend higher. The game's afoot, but Roblox fans don't mind logging in for the experience.
2. Coinbase Global
Coinbase has been climbing the wall of worry in 2023, and investors aren't complaining. The leading cryptocurrency exchange is trading 55% higher this year, but it's still 85% below its peak that also took place in late 2021.
The stock has moved higher this year despite the collapse of a few once-popular crypto platforms and Coinbase being on the receiving end of a Wells Notice from the Securities and Exchange Commission, alleging violations of federal securities laws. The rebound is still easy to explain. Digital currencies have recovered this year.
To be fair, the more recent Coinbase investors -- as in those who have bought in over the past few weeks -- aren't faring so well. The stock is down roughly 20% over the past month, including a 7% drop on Monday. Wood isn't afraid to buy the dip here. It's her fifth-largest holding across all of the Ark Invest funds.
3. Twist Bioscience
Roblox and Coinbase are crushing the market in 2023 despite recent setbacks. Twist Bioscience isn't as lucky. Shares of the maker of synthetic DNA have plummeted 43% this year. The stock took an 18% hit when it posted weak guidance following its fiscal first quarter in early February.
Revenue rose 29% to $54.2 million, in line with Wall Street expectations. Its loss was also better than what analysts were targeting. However, calling for $56.5 million in revenue for the fiscal second quarter -- when Wall Street pros were huddled around $61.9 million -- was a letdown.
Analysts at Baird and Barclays lowered their price targets on the stock following the poorly received financial update. The next test is coming soon. Twist Bioscience will make its fiscal second-quarter performance official when it announces quarterly results on May 5. There's never a dull moment in the volatile realm of life sciences stocks.
