Cathie Wood doesn’t take trading days off. The co-founder and CEO of Ark Invest publishes her trades for the family of exchange-traded funds she manages. She didn’t make many moves on Wednesday, but the moves she did make are worth watching.
Reddit (NYSE:RDDT), Intellia Therapeutica (NASDAQ: NTLA)And PagerDuty (NYSE: PD) were among four stocks Wood bought Wednesday. In all three cases she expanded established positions. Let’s take a closer look at that.
1.Reddit
It wasn’t long before Wood owned a piece of Reddit. She bought shares of the online community board on the day it went public three months ago. She added the modest stake two months later, the day after, in the first financial update as a listed company. This week marks the third time Ark Invest has put more money to work in Reddit, even as it remains one of Wood’s smallest overall holdings.
Unlike often when Wood builds her positions when they are on sell-off, Reddit shares rose higher on Wednesday and the day after its well-received quarterly report in early May. Reddit went public in March at $34. It is trading 77% higher today.
The platform of Reddit – a community of online communities – is sticky and popular. It reaches 82.7 million daily active unique users, a 37% increase over the past year. It is not being monetized as successfully as larger social media shares, but steps are being taken in that direction. The 48% revenue growth in the first quarter is better than the audience increase, so revenue per daily active user is increasing.
Losses have been a problem at Reddit, but last month’s quarterly report did show slightly positive free cash flow and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Analysts see Reddit reporting reported profitability by 2026 and generating positive adjusted net income for the first time this year.
The advantage is there for the truly global platform. Nearly half of its daily business is international, but average revenue per U.S. user is still more than four times higher. It should now also have momentum that comes with better brand awareness of a publicly traded, consumer-facing company. Revenue has accelerated for three consecutive quarters, and that was before the IPO.
This has been a tough year for Wood’s performance metrics. Many of its top holdings are trading lower this year. However, her decision to buy Reddit early and add to it in the ensuing months is paying off so far.
2. Intellia Therapies
Wood doesn’t just contribute to her winners. Intellia Therapeutics is down 24% in 2024 and is trading 44% lower over the past year. However, gene editing stocks are heading higher this week.
Intellia investors got a boost this week after positive test data. Intellia is working on CRISPR-based therapies, including several promising treatments entering third-phase clinical trials. This week’s positive news comes from NTLA-2002, a potential single-dose treatment for hereditary angioedema, which is much earlier in the clinical trial process. Angioedema is a rare genetic condition that resembles hives but takes place under the skin. Initial study data shows an encouraging average 98% reduction in the number of monthly swelling attacks, as well as a 99% reduction in severe attacks. It will obviously take some time to successfully navigate the regulatory approval process, but it is clearly positive that Intellia has a number of promising therapies in development.
Intellia is one of Wood’s twelve largest holding companies. Ark Invest now owns 10.8% of the stock’s outstanding shares.
3. PagerDuty
Like Intellia, PagerDuty is another Ark Invest holding that has seen double-digit percentage declines year to date and over the past year. Like Intellia, it also moved higher a few days ago after a bullish development. In PagerDuty’s case, it was a better-than-expected fiscal first quarter late last week that pushed the shares higher.
The cloud-based business analytics and uptime monitoring provider has posted eight straight quarters of slowing revenue growth, a path that has taken year-over-year revenue growth from 34% to 8%. However, annual recurring revenue growth is starting to stabilize, providing positive guidance for the current quarter. With short-term interest rates approaching record highs, PagerDuty has become a potential short squeeze candidate if it can accelerate its revenue growth this year.
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Rick Munarriz has no positions in any of the stocks mentioned. The Motley Fool holds positions in and recommends Intellia Therapeutics and PagerDuty. The Motley Fool has a disclosure policy.
Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought was originally published by The Motley Fool
