Cathie Wood had one of her busiest days of stock hunting on Tuesday. The co-founder, CEO, and chief investment officer at Ark Invest added to 13 of her existing stock positions across the firm's aggressive growth exchange-traded funds (ETFs).
Wood bought shares in Klarna Group (KLAR 3.60%), Roblox (RBLX 4.03%), and Circle Internet Group (CRCL 10.28%) on Tuesday. Ark appears to be taking advantage of recent weakness in the three once-high-flying stocks to build out larger positions. Let's take a closer look at these fresh purchases.
Image source: Getty Images.
1. Klarna
Shares of Klarna tumbled 9% on Tuesday after posting its first quarterly results as a public company. Things obviously didn't go well for the buy now, pay later (BNPL) player, but the sell-off was enough to get Wood excited about adding to her stake that was initiated when Klarna went public in September.
Revenue rose 28% -- or 26% on a like-for-like basis -- to hit $903 million in the third quarter. Some key markets including the U.S. and Southern Europe rose at much headier levels, but that only naturally means that other territories were weaker than the reported top-line results. Gross merchandise volume of $32.7 billion was a 23% year-over-year improvement on a like-for-like basis.
NYSE: KLAR
Key Data Points
The fresh financial results -- including a net loss of $0.25 a share for the quarter -- were just ahead of market expectations, but at least four analysts would go on to slash their price targets on Klarna following the report. They generally acknowledge that it was a solid report, and that guidance for the current quarter is reasonable. The concerns center largely around the costs that Klarna will incur as it enters new markets as well as its credit durability.
Klarna competes in the highly competitive BNPL space. It's been partnering with a growing number of merchants to allow their shoppers to take advantage of short-term financing for purchases of all sizes. It's a tech leader in this niche with artificial intelligence (AI) tools to make better connections between shoppers and the retailers they frequent.
It hit the market in early September at $40, but Klarna stock is now a broken IPO. The shares hit another intraday low on the way to its $31.63 close on Tuesday. There is certainly growth for the taking, particularly with younger shoppers taking advantage of interest-free installment loans being bankrolled by the merchants. The rub here is that delinquencies -- while stable for now -- can prove problematic if consumer sentiment continues to sour heading into this holiday shopping season and beyond.
NYSE: RBLX
Key Data Points
2. Roblox
Roblox didn't slide on Tuesday, but the shares have plummeted 24% since posting financial results three weeks ago. Despite the downticks, growth is booming for the online gaming platform developer. There were 151.5 million daily active users on Roblox in the third quarter, a 70% jump over the past year's tally of daily visitors. There was a 91% jump in hours spent on the platform, so engagement is improving on top of spectacular user growth.
Revenue rose a more modest 48% for the quarter, but bookings were still up a robust 70%. Monetizing the resurgence in popularity will be both an opportunity and a challenge for Roblox. The stock sliding following the seemingly healthy performance stems in part from analysts widening their reported loss projections for next year, as costs ramp up to take advantage of the boost in popularity. Another major factor for the stock's post-earnings dip is that Roblox had been one of this year's biggest winners. Even with the recent retreat, the stock is still trading 76% higher year to date through Tuesday's close.
NYSE: CRCL
Key Data Points
3. Circle Internet Group
Like Klarna, Circle is another volatile IPO this year. The shares have declined 11% since the company pulled back the curtain on its third quarter a week ago. Like Roblox, it was a case of a markdown despite blowout results for a stock that had rallied sharply higher earlier this year.
Circle is a leader in fintech solutions for the cryptocurrency market. It's the issuer of USD Coin (USDC +0.02%), a popular stablecoin approaching $75 billion in circulation. Revenue growth has been accelerating for Circle, clocking in with a 66% jump in revenue in last week's quarterly update. The rub is that Circle went public at $31 in early June, but it almost hit $300 just weeks into its publicly traded timeline. It's been cooling down ever since, and the recent correction for digital currencies isn't helping.
It's a wild chart for a stock that specializes in the "stable" side of the crypto universe with USD Coin pegged to the U.S. dollar. Circle is also profitable. The shares will likely continue to be volatile, and it's not a surprise to see Wood buying on the dip -- just as she was unloading some shares over the summer when the stock was soaring.
