Iconic growth investor Cathie Wood is hoping to bounce back this year. The largest of her funds at Ark Invest -- where she's a co-founder and CEO -- is down 7% this year, a contrast to the markets trading slightly higher in 2024. She's not standing still but rather continuing to make opportunistic buys and sells across her portfolios.
Wood bought shares of Palantir Technologies (PLTR 1.38%), Teladoc (TDOC 2.92%), and Roku (ROKU 4.10%) on Tuesday, building up some of her largest positions. Palantir has slipped a bit since hitting a two-year high last month, but Teladoc and Roku are trading well below their earlier peaks. Let's take a closer look at these three purchases.
1. Palantir
Palantir was one of last year's biggest market gainers, and it didn't slow down in early 2024. The software developer for the intelligence community saw its stock nearly quadruple in the 14 months through the end of February. The shares would go on to hit a fresh two-year high in early March, but Palantir is now trading lower for the second month in a row.
Palantir is scoring significant deals, but it's no longer merely a play on solutions for the military and other public sector entities. The same skills that made it popular as a government contractor are playing well with private companies. U.S. commercial revenue may have been just $131 million -- or less than 22% of the $608 million it generated in its latest quarter -- but that segment's top line soared 70%.
Image source: Getty Images.
A steady trickle of press releases celebrating new contracts is helping to get Palantir noticed. It's also been popular over the last year and change as a play on artificial intelligence (AI).
The upticks have become a bit too much for even some of its earlier believers. Brian White at Monness, Crespi, Hardt & Co. downgraded Palantir to sell two weeks ago, concerned about how the "AI hype cycle" has lifted the stock's valuation to unsustainable levels. Naturally, Cathie Wood doesn't see it that way. She added to her stake on Tuesday.
2. Teladoc
One of the big market winners early in the pandemic crisis was Teladoc. The pioneer of telehealth services was offering the right platform at the right time. Anyone could receive a medical consultation for a growing number of concerns without leaving the home, as long as they had an online connection and, ideally, a webcam.
Instead of catapulting telemedicine into the mainstream, folks apparently didn't mind taking time out of their day to wait it out at doctors' and therapists' offices. Revenue has decelerated for 11 consecutive quarters at Teladoc, and that's not even the biggest problem with the platform.
The number of visits serviced by the telehealth service declined 8% in its latest quarter, falling 1% for all of 2023. The number of people on insurance plans that cover Teladoc visits continues to grow, but an increasing number of them are going back to in-office consultations.
The red ink continues, and analysts don't see the losses going away until 2027 at the earliest. Its CEO stepped down last week, but it may take more than fresh leadership to get Teladoc back on track.
3. Roku
Roku may have more than doubled last year, but the stock is still trading 87% below the all-time high it hit in the summer of 2021. The popular streaming video hub keeps growing its audience. Monetization and a lack of profitability continue to be its biggest challenges.
Revenue has resumed double-digit percentage growth in its last three quarters, but deficits continue. Like Teladoc, analysts don't see Roku returning to profitability until 2027. Another pressure point with investors is that average revenue per user posted a decline on both a sequential and a year-over-year basis.
With the competitive landscape starting to heat up, Roku's cost-prioritizing initiatives can't come at the expense of engagement. Roku will have a lot to prove when it offers up its first-quarter results next month.
