Cathie Wood was a busy buyer on Tuesday. The CEO, co-founder, and widely followed stock picker for the Ark Invest family of exchange-traded funds (ETFs) added to six of her existing positions. She sold some shares in other stocks, but adding to a half-dozen names hasn't happened a lot for Wood lately.
Wood publishes her transactions at the end of every trading day, so we know what is moving up or down in the Ark Invest funds. What is she adding to her portfolios lately? Wood increased her stakes in The Trade Desk (TTD 3.55%), Spotify (SPOT 2.67%), and Archer Aviation (ACHR 2.70%) on Tuesday. Let's take a closer look at these three purchases.
NASDAQ: TTD
Key Data Points
The Trade Desk
Wood bought shares of The Trade Desk on Tuesday, and the timing was solid. William Blair initiated coverage of The Trade Desk on Wednesday morning, encouraged by the opportunity for the leader in programmatic advertising to cash in on the migration by marketers to digital solutions.
William Blair feels that The Trade Desk will continue gobbling up market share in the $840 billion global advertising industry. The company has already held up better than even its fellow digital advertising specialists this year, and William Blair sees revenue growing 23% in fiscal 2023 on healthy margins for its differentiated platform.
Image source: Getty Images.
In the second quarter, revenue rose 23% for The Trade Desk. The top line has climbed 22% over the past six months, so William Blair eyeing 23% growth for all of this year -- in line with the Wall Street consensus -- suggests that growth will accelerate marginally in the second half of this year.
The Trade Desk represents the future of advertising. The top dog in demand-side programmatic advertising provides marketers the tools to help them show the right ads to the right people. Investors agree. The stock is up 85% so far this year, though it did pull back in August.
NYSE: SPOT
Key Data Points
Spotify
Another stock rocking out this year is Spotify. Shares of the streaming audio specialist have now more than doubled in 2023 thus far. It raised prices this summer, a move that can shorten its path to profitability if the higher monthly subscription rates lead to a spike in churn.
Investors weren't initially pleased with this summer's second-quarter results that accompanied the price hike. The platform's popularity is still growing. Spotify had a record 551 million total monthly active users at the end of June, a 27% increase over the past year. Revenue rose only 11%, as the pace of growth with its ad-supported users was greater than its paying accounts. Just 220 million of Spotify's 551 million monthly active users are premium subscribers, but they make up 87% of the revenue mix.
The performance was also problematic at the other end of the income statement. Its adjusted operating loss was better than Spotify had initially projected, but steep losses continue and free cash flow contracted sharply. The key here is if premium subscribers take to the higher prices. It also can only help if the ad market recovers, as ad revenue rose just 12% in its latest quarter despite 34% more ad-supported users on the platform.
NYSE: ACHR
Key Data Points
Archer Aviation
There are a couple of publicly traded companies trying to make short-range air travel happen for affluent customers or time-sensitive medical procedures. Archer Aviation has emerged as a popular player with its electric vertical takeoff and landing (eVOTL) aircraft.
Archer Aviation has yet to generate revenue, and losses are expected to continue for several years. However, the shares are moving higher as it lines up financing, strikes long-term partnerships, and clears regulatory hurdles from the Federal Aviation Administration (FAA) to literally and figuratively get its business off the ground.
Investors aren't concerned about the near-term lack of revenue. The stock has more than tripled so far this year. The Trade Desk, Spotify, and Archer Aviation are all beating the market as growth stocks. Wood clearly doesn't mind adding to her 2023 winners this week.
