There are growth investors, and then there is the more aggressive Cathie Wood. The co-founder, CEO and investment manager of Ark Invest has struggled to duplicate the market-crushing success she achieved four years ago, but she is always on the move.
Wood increased its existing interests Amazon (NASDAQ: AMZN), Ibotta (NYSE: IBTA)And Teradyne (NASDAQ: TER) on Monday. Let’s take a closer look at these three new purchases for Ark Invest’s family of exchange-traded funds.
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Unlike the other two names on this list, Amazon hit another all-time high this month. The leading online retailer is delivering consistent low double-digit sales growth and continues to invest in new offers and partnerships to ensure it stays at the top.
Like Wood, Amazon itself is always making progress. Last week, it announced that it would expand its previous investment in promising AI startup Anthropic. A new $4 billion investment in Anthropic will make the e-commerce giant’s Amazon Web Services (AWS) the premier training partner for Anthropic. AWS Trainium will be used to train and deploy Anthropic’s largest foundation models. More importantly, it’s a shortcut for Amazon to grow from a laggard to a leader in AI, which was previously a worrying shortcoming.
Amazon shares are doing well, up 33% this year. This doesn’t mean everything is rosy as Amazon enters the holiday shopping season later this week. At least one analyst is issuing a warning this week, noting that about half of Amazon’s products come from China, making it vulnerable to tariffs likely to be imposed on imports next year.
Haul’s launch in beta earlier this month could also take a hit. Investors hailed Amazon’s new deep-discount platform — with most products selling for $10 or less — as a way to take on faster-growing Chinese rivals Temu and Shein. But where do you think Amazon’s products are cheap enough to compete with the younger, budget speedsters?
The good news is that Amazon has a history of overcoming challenges and challengers. The recent move to lock in seller fees through 2025 may have been seen by investors as a missed opportunity, with one analyst calling it a $2 billion headwind. However, Amazon tends to stay a few steps ahead of the doubters.
Behind most failed initial public offerings (IPOs) is a bad first impression. Ibotta has failed to convince investors three times. The company behind the digital marketing platform that offers shoppers rewards for purchases through its advertising partners has posted back-to-back quarterly results. The stock has plummeted 40% since its initial public offering in the spring at $117.
Ibotta’s business makes sense for all economic climates. People sign up for the cash back rewards program and score money when they make purchases online or even in person with an Ibotta retail partner. It works, as evidenced by the 15.3 million users who redeemed Ibotta points for cash in Ibotta’s last quarter. When the economy is running, consumers shop. When the economy stagnates, advertisers should flock to platforms like Ibotta, which only charge the brand for actual sales. Unfortunately, growth is slowing dramatically this side of the platform’s IPO.
Turnover increased by 52% last year. The annualized pace has slowed to 43%, 14% and 16% respectively in the first three quarters of this year. The $100 million to $106 million it’s targeting for the current seasonally strong holiday quarter is just a 4% increase at the midpoint.
Teradyne shares have lost nearly a third of their value since a summer peak, and that could be a sign for an opportunistic Wood. The chip testing equipment maker began stumbling in late July after posting weak guidance following solid second-quarter results.
Performance improved last month. Teradyne beat expectations at the top and bottom end of its admittedly lowered forecast, but this time the midpoint of current quarter revenue and earnings expectations was in line with where Wall Street pros were parked.
Teradyne is coming off consecutive years of double-digit revenue declines, but annualized profits have turned positive in the past two quarters. Wood is not the only one who sees opportunities here. Two weeks ago, Teradyne’s board added another $100 million to its previously announced $2 billion share buyback authorization.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rick Munarriz has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Teradyne. The Motley Fool has a disclosure policy.
Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought was originally published by The Motley Fool
