It's shaping up to be another rocky week of trading, and the volatility will probably keep Cathie Wood busy. The co-founder, CEO, and ace stock picker for Ark Invest tends to be active when the market's moving one way or another. She bought shares in four different companies across her family of growth-focused exchange-traded funds during Friday's sell-off. I want to talk about three of them.
Wood added to her existing positions in Amazon (AMZN 2.61%), Coinbase Global (COIN 4.13%), and CRISPR Therapeutics (CRSP 1.68%) on the final trading day of last week. Let's take a closer look at Ark's latest purchases.
NASDAQ: AMZN
Key Data Points
1. Amazon
The leading online retailer saw its shares slide 13% during the dramatic sell-off on Thursday and Friday, roughly in line with the overall market's pullback. Amazon has now shed nearly 30% of its value since hitting an all-time high just two months ago.
Amazon peaked two days before posting better-than-expected fourth-quarter financials. Net sales rose 10% to $187.8 billion for the holiday-spiked quarter. The path down the income statement was even better. Amazon's operating profit soared 61% to $21.2 billion. Net income nearly doubled to $20 billion. It was a seemingly strong financial performance, but there's a reason things have been largely going downhill since the Magnificent Seven workhorse announced its results.
Image source: Getty Images.
Guidance was the initial dagger. The fourth quarter was great, but the outlook for the first quarter that ended last week was less than encouraging. Amazon is eyeing just $151 billion to $155.5 billion in net sales for the first three months of this year. The sequential dip isn't a problem; it's what happens to most retailers after the holiday sales subside. The problem is that this is just a 5% to 7% increase from where it landed a year earlier for the same quarter.
Amazon is targeting $14 billion to $18 billion in operating income, a mere 5% increase at the midpoint from the $15.3 billion the company rang up in the prior year's first quarter. But analysts continue to be optimistic. They see net sales rising 8% with bottom-line results rising nearly 40% when Amazon reports in a couple of weeks. With Amazon stock selling off with the market in recent weeks, it isn't a surprise to see Wood side with the upbeat Wall Street pros and buy more of the stock during its 29% drawdown.
NASDAQ: COIN
Key Data Points
2. Coinbase Global
It's not just stocks that are falling these days. Crypto has also proved mortal. Like Amazon, Bitcoin (BTC 1.32%) has surrendered nearly 30% of its value since peaking earlier this year. A lot of the lesser known digital currencies have taken even bigger hits.
As the leading crypto-trading platform, Coinbase may not mind the volatility at first. Big swings in crypto generate a surge in trading volume. However, Coinbase is at its best when Bitcoin and other cryptocurrencies are rising. Bullishness works wonders for growing account assets.
Analysts may see Coinbase revenue soaring for the first quarter that it will discuss later this earnings season. Unfortunately, they see profitability cut nearly in half. Unlike Bitcoin's almost 30% slump since peaking in January, Coinbase has surrendered more than half of its value since hitting an all-time high in December. Despite clearing regulatory hurdles and being a market leader in crypto trading, investors have turned on Coinbase. But Wood doesn't mind being a contrarian, buying when momentum is going the other way.
NASDAQ: CRSP
Key Data Points
3. CRISPR Therapeutics
There are several gene-editing stocks in the Ark Invest portfolios. CRISPR is one of her 10 largest combined holdings across all investments. CRISPR is working on working providing oncology, autoimmune, diabetes, and cardiovascular solutions through its gene-editing leadership.
Last week's resignation of FDA chief Dr. Peter Marks has sent most biotech and biopharma names lower. The fear is that the departure of the pro-vaccine Marks will slow approvals for treatments in clinical trials. CRISPR did score a victory late last week, when the FDA granted its potentially promising follicular lymphoma treatment orphan status, theoretically giving an easier path to approval. The news was enough to find CRISPR trading flat in an otherwise rough trading day on Friday, but the stock has still been cut in half since peaking last summer.
The stock has been hit so hard that its $1.9 billion in cash accounts for nearly two-thirds of its current market cap. The rub is that CRISPR is still losing lot of money, but that rarely stops Wood from investing in companies that she thinks are early-stage disruptors in promising industries.
