Cathie Wood is always making moves. We know that because the Ark Invest co-founder, CEO, and chief stock picker publishes her daily transactions at the end of every trading day. What is she buying these days?
Wood added to her existing positions in Roku (ROKU -10.29%), Ginkgo Bioworks (DNA 10.60%) and Archer Aircraft (ACHR 1.00%) on Wednesday. What does Wood see in these three growth stocks? Let's crack open the hood and take a closer look.
Roku
The good news is that Roku is beating the market this year. The bad news is that shares of the streaming video pioneer have fallen 37% since peaking this summer. The stock hit a 52-week high in August, but it scored a three-month low on Wednesday.
The latest buzzkill came on Tuesday when Wells Fargo analyst Steven Cahall slashed his price target on Roku from $84 to $70. He feels that ad trends can weaken in fourth quarter, a problematic development since video ads make up the lion's share of Roku's revenue model.
Image source: Getty Images.
It won't take long for investors to see if the analyst concerns are warranted. Roku reports its third-quarter results in two weeks, and it should update its guidance then. The platform itself is still growing. Roku closed out the second quarter with 73.5 million active accounts, a 16% increase over the past year. Revenue rose 11%, failing to keep pace with higher user and engagement growth largely as a result of the sluggish connected TV ad market.
The midpoint of Roku's guidance for the upcoming report would be 12% in top-line growth. It would be the third consecutive quarter of accelerating year-over-year revenue gains, but now the real concern is Roku's outlook for the seasonally potent holiday quarter. The market has a love-hate relationship with streaming service stocks, but Roku stock is still trading 53% higher this year despite the recent sell-off.
Ginkgo Bioworks
It's been a busy week for Ginkgo Bioworks. The biosecurity and biofoundry specialist has put out a pair of press releases this week. On Monday it was the announcement of a collaboration with Zenfold Sustainable Technologies to use Ginkgo's enzyme services to unearth an enzyme to produce veterinary products without the traditional chemical process. The goal is to emerge with a sustainable biological solution.
Tuesday's news was the completion of its first collaboration with Persephone Biosciences, a synthetic biology company trying to revolutionize patient health through the microbiome. The end result is an engineering toolkit that Persephone can use to develop microbiome therapeutics. The positive news wave hasn't helped. The shares are trading slightly lower than where they were when the week began through Wednesday's market close.
It will take more than words in a press release to turn sentiment around. This is the one stock on this list that is not beating the market in 2023. Its latest quarterly report was a disappointment this summer. Ginkgo Bioworks lowered its revenue guidance to between $245 million and $260 million for all of this year, a far cry from the $478 million it delivered last year when it was still fueled by assisting with COVID-19 screenings at airports and schools.
Archer Aviation
No stock has been flying as high in Wood's eyes as Archer Aviation, a leader in the emerging market for electric vertical takeoff and landing (eVOTL) aircraft. Wood adding shares to half of her ETFs on Wednesday makes it the tenth consecutive trading day that she's bought into Archer.
The current buying streak began on Oct. 5, the day after it announced that the U.S. Air Force paid its first $1 million to Archer for contracts that could be valued as high as $142 million as the military ponders applications for the light and quiet aircraft with limited payloads.
Archer is still several years away from generating meaningful revenue and even farther away from turning a profit. The market's apparently patient with the long play. It's one of this year's hottest stocks, nearly tripling in 2023.
