Cathie Wood's investing style is back in fashion this year. The founder, CEO, and chief investment officer of Ark Invest is having a good year, bouncing back in a major way after a brutal run in 2021 and 2022. She posts her daily transactions at the end of every trading day, and she was particularly busy to kick off the new week.
What was Wood buying on Monday? She added to her existing positions in Twilio (TWLO 1.47%), SoFi Technologies (SOFI 3.69%), and Meta Platforms (META 0.43%). Let's take a closer look at these three purchases.
Twilio
It's not just Ark Invest funds that are bouncing back this year. Shares of Twilio have moved 36% higher in 2023, but it still has a long way to go before recovering its sharp slide through the two previous years. The stock is still 85% below its all-time high set more than two years ago.
The leading provider of in-app communications solutions is still climbing a wall of worry. Twilio moved lower on Monday after an analyst downgrade. Piper Sandler lowered its rating on Twilio to neutral from overweight, but it did boost its price target from $56 to $71 to account for the stock's recent rise.
Despite the higher target, Piper Sandler feels that the upside is limited at this point. Its previous quarter was rough. Some of its customers in industries that experienced a slowdown since the middle of last year -- having a negative impact on Twilio's usage-based billing -- may be showing signs of recovering, but rival Wall Street pros appear to have sales estimates that are too optimistic in Piper Sandler's opinion.
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Revenue rose 15% in the first quarter. Double-digit growth may not seem problematic, but it's the seventh consecutive period of decelerating growth since peaking at 67% two years ago. Guidance at the time was calling for just a 4% to 5% top-line gain for the second-quarter results that it will post in three weeks. Its dollar-based net expansion rate hit a record low of 106%. This critical metric -- basically translating into existing clients spending 6% more over the past year than they did a year earlier -- is a far cry from the 127% score it posted a year earlier.
Wood obviously still believes in Twilio. She sees the stock initially heading lower on Monday in response to the downgrade as a buying opportunity.
SoFi Technologies
Twilio's 36% gain in 2023 is enough to beat the market, but the next two stocks have more than doubled this year. SoFi Technologies has soared 106% year to date, fueled by improving sentiment for fintech stocks as recessionary fears start to diminish. The next-gen provider of financial services needs a robust economy to keep the credit risks it takes on to be somewhat stable.
Folks keep flocking to SoFi's digital banking platform, and it boosted its full-year guidance in its latest financial update. Member accounts have risen 46% to 5.7 million over the past year. Like Twilio, the stock's ascent recently attracted an unfavorable analyst turn. Jeffrey Adelson at Morgan Stanley downgraded the stock to underweight on Thursday, feeling that the shares have run up too high despite his profitability concerns. His $7 price target is 26% below where the shares closed on Monday. It's clear that Wood doesn't mind buying when Wall Street pros are going the other way.
Meta Platforms
Meta is one of this year's biggest gainers, up a scorching 158% so far in 2023. The parent company behind Facebook, Instagram, and WhatsApp is global force, reaching 3.81 billion monthly active users across its platform. Unlike Twilio and SoFi, there hasn't been a major analyst downgrade over the past week.
There's a lot of buzz this summer about Threads, the new microblogging platform that's hoping to take advantage of recently polarizing moves at niche leader Twitter. It's not the reason for Meta's surge this year. The stock had already more than doubled before Threads was launched. A return to double-digit revenue growth in its latest quarter and Meta working on its third straight fiscal year of dramatic margin improvement are bringing investors back to the company formerly known as Facebook.
