Cathie Wood makes it easy to follow her stock moves. Ark Invest publishes all of its daily transactions, so we know what Wood, the co-founder and CEO of the firm that specializes in aggressive growth exchange-traded funds, is buying and selling.
She only added to two of her positions on Wednesday. What does Wood see as the best current buying opportunities? Ark increased its stake in Twilio (TWLO -0.73%) and Palantir Technologies (PLTR -2.60%). Let's take a closer look these big moves.
Twilio
Cathie Wood only bought one stock on Tuesday, and it was Twilio. The in-app communications specialist was one of two positions she added to a day later.
Wood clearly thinks this is a buying opportunity, but it's not exactly a chorus of consensus after Twilio posted disappointing financial results last week. The stock has plummeted 14% in the six trading days since its rough quarterly report. At least two analysts have downgraded the stock since Twilio's weak guidance, and a few more Wall Street pros have slashed their price targets on the stock.
Revenue rose 15% in last week's report. The dagger was its outlook. Midway through the second quarter, Twilio is eyeing just a 4% to 5% top-line gain for the period.
Image source: Getty Images.
Twilio isn't the same rock star it was in its prime. Two years ago its dollar-based net expansion rate was 133%, another way of saying that existing customers were spending an average of 33% more over the trailing 12 months than it was a year earlier. The rate slipped to 127% a year ago, and now it's at a record low of 106%. Existing clients are generating an average of just 6% more in revenue than a year earlier, barely keeping pace with inflation.
Twilio shares may be down a blistering 89% since peaking two years ago, but it's not going down without a fight. It has gone through a pair of layoffs since September, trimming 25% of its payroll in that time. In February it restructured its operations into two laser-focused segments. It's also buying back its own shares, taking advantage of the same dip that Wood is buying into.
The near-term performance is troublesome, but Twilio believes that the macro factors holding it back will improve over time. It feels it's in a strong position to reaccelerate bookings in the second half of this year. It's sticking to its earlier medium-term growth targets. It would be a nine-bagger from here if it can get back to its earlier highs.
Palantir Technologies
Wood isn't only happy when it rains. She's adding to her Palantir stake even though it moved sharply higher after posting blowout quarterly results. Passing ships with Twilio, Palantir stock has soared 32% over the last seven trading days since its well-received update. The stock ended Wednesday at its highest close since last summer.
The software builder for the intelligence community didn't fish out any Wall Street upgrades following its better-than-expected results. This isn't exactly the mirror opposite of the Twilio tale. However, a couple of firms did jack up their price targets on Palantir.
It may seem odd to see a company at the mercy of government contracts thriving in this current climate, but Palantir's been able to post year-over-year growth of 17% or better in every quarter during its brief publicly traded life. The big-data business intelligence specialist has posted three consecutive quarterly profits, and it expects to stay in the black at this point. With its stock trading roughly where it opened when it started trading three years ago it's a compelling time to pick up a company that is now profitable and generating double the revenue that it was posting when it hit the market.
