Cathie Wood kicked off the holiday-abridged trading week with an appetite for equities. The Ark Invest co-founder, CEO, and iconic stock picker added to a few of her larger positions on Tuesday. We know what she's buying and selling because she puts out a summary of her transactions at the end of every market day.
What's she collecting these days? Wood added to her stakes in Twilio (TWLO 1.47%), Teladoc Health (TDOC -2.40%), and Zoom Video Communications (ZM 1.57%) on Tuesday. Let's look at a closer look at the stocks she is buying.
Twilio
Shares of Twilio have moved higher this year, but the 37% year-to-date gain doesn't feel as earned as some of the other more pronounced tech stock bounces of 2023. It doesn't help that one of its larger moves higher -- three weeks ago -- came on reports of an activist investor pushing for changes. It's only a short-term catalyst when the bullish development is that a vocal shareholder feels you're not doing enough.
Twilio was a market darling a couple of years ago, and it made sense. The provider of in-app communications solutions was propelling the mobile revolution. Its cloud-based platform would help app users do more without leaving the app. Users would receive notifications when their ride-share driver was arriving, to change their streaming service passwords, or to confirm a villa rental all inside of a mobile application. Business has slowed significantly, and it stings even if it's not the fault of Twilio itself.
Image source: Getty Images.
Revenue growth has decelerated for seven consecutive quarters, a path that started at 67% year-over-year top-line gains being whittled down to a 15% increase in its latest report. It gets worse. Twilio's guidance calls for 4% to 5% revenue growth for the current quarter.
Twilio remains a leader in an important niche, but many of the industries that lean on in-app communications solutions have been struggling lately. Twilio clocked in with a record low dollar-based net expansion rate of 106% in its latest quarter. This means that existing clients are generating 6% more in revenue than they were a year ago. A positive number may seem like welcome news, but the net expansion rate was 127% a year ago (and 133% the year before that).
Teladoc Health
There isn't a lot of sugarcoating when it comes to Teladoc. In a year of rallying growth stocks it's trading roughly where it was at the end of 2022. The shares are a blistering 92% off their all-time high from early 2021.
As a pioneer of telehealth services, Teladoc's popularity erupted early in the pandemic when traditional medical offices weren't safely available. It should've been a breakthrough moment for consumers, embracing the simplicity and convenience of a video consultation for a wide variety of medical needs. It didn't stick. Folks are perfectly fine returning to medical offices, and it shows when it comes to Teladoc.
Teladoc has posted eight straight quarters of rapidly decelerating revenue gains. If you thought Twilio's slowing trajectory was rough, the top-line quarterly upticks at Teladoc have gone from an acquisition-padded 151% down to 11% organically over the past two years. This wouldn't seem like a grim diagnosis if Teladoc wasn't three years away from profitability with the market for telemedicine stocks growing more competitive.
Zoom Video Communications
It's been a swift 88% drop for Zoom Video Communications since it peaked in late 2020, and it's easy to see why the videoconferencing leader has fallen out of favor. Some workplaces will still have Zoom meetings, but classrooms, live shows, and social reunions have largely returned to their earlier brick-and-mortar state.
Like Teladoc, Zoom is trading barely higher in 2023, failing to actively participate in this year's growth stock renaissance. Investors frustrated to see Twilio and Teladoc's growth slowing to the low double digits have nothing on Zoom Video. The early winner of the shelter-in-place movement has rattled off four consecutive quarters of single-digit revenue upticks.
Wood seems to be happy zooming into Zoom. It's even a rare value stock in her portfolio, fetching a reasonable 16 times this fiscal year's projected earnings.
