Cathie Wood bounced back in 2023, but this year has been off to a rough start. The Ark Invest co-founder, CEO, and stock picker has seen some of her largest positions take a hit. Ark's largest exchange-traded fund is down 14%, a sharp contrast to the modest ascent by the general market.
When the going gets tough do the tough get shopping? Wood continues to add to some of her positions. Some of the more interesting names she bought on Monday include Toast (TOST 3.42%), Genius Sports (GENI 0.39%), and Coinbase Global (COIN 5.68%). Let's take a closer look at some of her latest additions.
1. Toast
It's hard to avoid Toast readers these days. If you dine out or pick up takeout, there's a growing chance that you will have to settle up your tab with a Toast point-of-sale system to wirelessly complete the transaction. There are now 99,000 locations leaning on Toast to do more than just ring up customers. Toast's cloud-based solutions can cover everything from inventory control to managing third-party delivery apps.
Toast went public at $40 three years ago. The shares have been cut by more than half, and that's with trailing revenue more than tripling in that time. Toast is also inching closer to profitability.
Image source: Getty Images.
Toast warned in its latest quarter that transaction revenue per location was flat with the prior year, but revenue still shot 37% higher since the store count has climbed 34% over the past year. The real dagger was that Toast was expecting transaction revenue per location to decline in the fourth quarter, but it won't be the end of top-line growth.
This is a leader in a growing niche, and analysts see roughly 20% annualized growth through at least the next four years. The shares are trading at an enterprise value that is a reasonable 2.5 times trailing revenue. Throw in a cash-rich balance sheet, and time is on Toast's side.
2. Genius Sports
Gambling stocks have been on a roll over the past year. Genius Sports doesn't have a shiny online sportsbook or a flashy ad it's saving for the big game, but it's still in the game.
Genius Sports is a data specialist with a sports bent. It provides athletic leagues, media empires, and, naturally, sportsbooks, with real-time information necessary to settle the score. You can bet on individual casino stocks, but why not place a wager on the back end of the business as well as a broader play for the sports market itself?
Revenue rose 29% in its latest quarter, fueled by double-digit top-line gains across all three of its operating segments. Its guidance calls for revenue growth to slow to 20% for the quarter.
The stock is still not on most investing radars with its single-digit price tag. Wall Street pros are starting to notice. Macquarie Group initiated coverage of Genius Sports around the holidays, arguing that the stock can double in the next year or two.
3. Coinbase Global
A big reason for Wood's funds performing so badly early in 2024 is that her top holdings are reeling. The two largest holdings across all of her funds are down 33% and 27% so far this year. Coinbase is currently her largest position, and it's the one that has surrendered a third of its value.
The world's largest crypto trading exchange was a five-bagger last year. The rally in crypto prices and an industry shakeout thinning out the playing field helped Coinbase and its fellow survivors. This year the arrival of spot exchange-traded funds (ETFs) failed to deliver gains to the crypto market. Concerns that interest rates will remain high are also weighing on the trading platform.
