There's no dimmer switch on Cathie Wood. The Ark Invest co-founder and CEO is either fully illuminated or left in the dark. The same widely followed growth investor who trounced the market in 2020 and 2023 faltered badly in 2021 and 2022. She's also off to a challenging start here in 2024.
She's not standing still. Ark bought shares of Roblox (RBLX 2.08%), Roku (ROKU 4.05%), and SoFi Technologies (SOFI -10.23%) on Thursday, adding to her existing positions. Let's take a closer look at these three stocks that Wood is now buying.
1. Roblox
Despite rallying last year, shares of Roblox continue to be a broken IPO. The online gaming platform developer finds its stock trading below the $45 reference price it hit the market with three years ago. Roblox once traded as high as $141.60 in late 2021, but it's 74% lower than that high-water mark right now.
It doesn't mean that Roblox isn't rolling at the moment. The platform's popularity is growing again after stalling a year ago. Revenue rose 30% in its latest quarter, fueled by a 25% surge in bookings. Average daily active users have risen 22% over the past year to 71.5 million, and the 21% increase in total hours spent on the platform is in line with that growth so Roblox continues to be engaging. Average monthly unique payers are up a slightly more modest 18%, but that's not a deal breaker.
Image source: Getty Images.
Investors naturally can't take growth for granted. Roblox caters to a largely young audience of users, and it will need to continue making sure that it's still resonating with a historically fickle audience. Its top-line guidance for 2024 is strong, but the bottom line continues to be a pressure point.
Roblox expects its losses to widen this year. Analysts don't see the open-ended platform turning an adjusted profit until 2027. A lot can naturally happen in the next three years. There have been plenty of ups and downs in its first three years of trading. Wood obviously is a believer. Roblox is Ark's eighth-largest holding across all of its fund positions.
2. Roku
Shares of Roku more than doubled this year, but 2024 has been another story. The stock has shed more than a third of its value this young year after a poorly received financial update and the threat of a new competitor.
The world's original streaming service hub is still widening its reach. It hit a record 80 million active accounts by the end of last year, a 14% increase. Engagement remains strong, but monetization is what tripped up the stock after its scorching-hot return in 2023. A sequential dip in average revenue per user came as an unwelcome surprise to investors. One of its much smaller rivals also agreed to be acquired by the country's largest retailer, a move that makes a tiny player more significant in the coming years.
Wood has been adding to her stake in the volatile streaming services stock since it started to sell off. It's her fourth-largest position at Ark.
3. SoFi Technologies
Like Roku, SoFi more than doubled last year. The digital banking and fintech provider joins Roku and Roblox with a double-digit percentage decline so far in 2024. It's Ark Invest's 30th-largest position.
SoFi came through with its first quarter of reported profitability in its latest quarter. The number of people with SoFi accounts has soared 44% over the past year. SoFi is eyeing 20% to 25% compound annual revenue growth through the next three years. The rub here is that economists now see the Fed holding off on the inevitable rate cuts that could trigger a surge in lending activity until later this year, and that has cooled last year's rebound in fintech stocks.
