Cathie Wood is cooling down this hot summer. The CEO, co-founder, and rock-star stock picker for the Ark Investment family of exchange-traded funds (ETFs) got off to a strong start in the first half of this year, but her aggressive investing style has proven mortal lately. Her largest ETF has declined by more than 20% since peaking four weeks ago.
Wood publishes her transactions at the end of every trading day. What is she adding to her portfolios these days? Wood added to her stakes in UiPath (PATH 0.26%), Ginkgo Bioworks (DNA 10.60%), and Archer Aviation (ACHR 1.00%) on Thursday. What does Wood see in these three somewhat companies? Let's explore why she thinks they could be the ticket to getting back into a good groove.
UiPath
It's not just the Ark ETFs correcting after a strong first half of the year. Shares of UiPath rose 30% through the first six months of 2023, but the stock is now down 27% since peaking in June.
UiPath is a leading provider of robotics and automation software solutions. Business should be booming in this climate of rising labor costs as companies look to cut costs and headcounts while also improving efficiencies through automation. Reality hasn't been as kind.
Image source: Getty Images.
Instead of accelerating its business, growth is actually slowing. Revenue soared 81% in fiscal 2021, which ended in early 2021, as companies embraced UiPath solutions following the pandemic-related manpower shortages. Three years later, UiPath is eyeing just 20% in top-line growth for fiscal 2024.
The bullish argument for UiPath remains intact. The global economic uncertainty is cooling demand to make the necessary investments in robotics and automation. Wood is playing the long game here, and it's not surprising to see her picking up some more shares after the recent pullback.
Ginkgo Bioworks
Ginkgo Bioworks investors can't seem to catch a break. The stock is trading lower in 2023's otherwise buoyant market, which follows a 63% drop last year. The latest step down came last week when it fell after topping off mixed financial results with disappointing guidance.
Ginkgo Bioworks toils away in biosecurity and biofoundry. Its biosecurity segment saw the company's revenue more than quadruple in 2021 when it was cashing in on COVID-19 screenings at airports and schools. The business is understandably fading now. The biofoundry segment helps clients design and cultivate bioengineered microorganisms at scale.
Revenue declined 44% in its latest quarter, but that was actually better than expected. Its loss narrowed but was a larger deficit than Wall Street was modeling. The real deal breaker was its guidance. Ginkgo Bioworks is now looking to book $245 million to $260 million for all of 2023, well below analysts who were perched closer to $293 million. Despite the uncertainties, Ginkgo Bioworks remains one of Wood's largest holdings. She now owns more than 10% of its shares outstanding.
Archer Aviation
Shares of Archer Aviation were flying high last week, but with the stock down 14% from last week's peak, it's easy to see why Wood is approaching the recent retreat as a buying opportunity. Archer Aviation is part of the new space race, a handful of publicly traded companies trying to make electric vertical take-off and landing (eVOTL) aircraft happen.
The stock got a short-lived boost last week when it announced a new deal with Boeing that settled litigation with the aerospace bellwether. It also secured $215 million in fresh financing, a lifeline in a nascent industry where profitability is still far away. Archer's Midnight aircraft also received safety certification from the Federal Aviation Administration (FAA), clearing the way to be the necessary flight testing.
The size of the addressable market for short-range electric aircraft that just need a small landing pad to take off and land is open for debate. The initial application will be a premium-priced taxi service, whisking passengers by air to and from airports into the center of highly congested major cities. It will be interesting to see how things evolve from there.
UiPath, Ginkgo Bioworks, and Archer Aviation are intriguing additions to Wood's shopping list on Thursday. It will be interesting to see whether she continues loading up on these off-the-radar growth stocks.
