There are not many fund managers who are as widely followed as Cathie Wood. The co-founder and CEO of Ark Invest became a rock star in 2020 when her aggressive investing style delivered explosive returns. As of 2023, she has only conquered the market for one year, but once she gets going, she is a force.
Wood also happens to publish the daily trades executed for Ark’s exchange-traded funds, giving investors a glimpse into her investment strategy. What is she buying these days? She started the new trading week by expanding her bet Roku (NASDAQ: ROKU), Teladoc (NYSE: TDOC)And Blade Air mobility (NASDAQ:BLDE) on Monday. Let’s take a closer look at these three purchases.
1. Roku
“The Thrill of Victory and the Pain of Defeat” was part of the popular opening for ABC’s Broad sports world. Roku investors have been experiencing it since last year. It was the thrill of victory in 2023, when Roku shares more than doubled as revenue growth accelerated sequentially in the first three quarters of the year.
The pain of the defeat component has started this year. The streaming video hub’s shares have plunged 36% in 2024. The biggest culprit for Roku came in February when it delivered problematic financial results. Revenue growth slowed, average revenue per user fell, and a new competitor arrived on the scene after agreeing to acquire a fringe player in Roku’s space.
Roku shareholders won’t have to wait long for a chance at redemption. The company will announce its first quarter results next week. The expectations are surprisingly robust. Analysts see revenue growth accelerating again, an increase of 20% in the first three months of this year. They also see Roku’s quarterly loss cut by more than half.
The platform is still growing its audience and engagement remains high. A healthy report and a subsequent earnings call next week (Thursday afternoon for those who draw circles on calendars) could see Roku move higher again. Ark Invest’s Wood is buying ahead of the report.
2. Teladoc
Teladoc isn’t exactly the paragon of healthcare these days, and even a change at the top hasn’t been able to generate positive momentum for the pioneer of telehealth services. Shares are now down 96% from their all-time high in early 2021. Teladoc shares hit a new seven-year low on Tuesday morning.
You don’t have to look far to determine what’s wrong with Teladoc. The company saw a surge in business early in the pandemic when scoring a remote medical consultation was a major issue, but it didn’t catch on when doctors’ and therapists’ offices reopened. Revenue has slowed for 11 consecutive quarters, and telehealth visits fell 8% year over year in the last quarter.
Teladoc announced on April 5 that CEO Jason Gorevic is stepping down. The board has appointed an acting CEO while it conducts a search for a permanent successor. A languishing stock often bounces back with a leadership change, but that was not the case here. Teladoc reports its first quarter results on April 25. The numbers probably won’t be pretty. If that were the case, you wouldn’t let go of your CEO. However, the stock could rebound later this month if it offers encouraging news on new leadership.
3. Air mobility of the blade
Another stock hoping to rebound this year is Blade Air Mobility. The provider of high-end on-demand helicopter transportation services saw its shares take a hit last month after disappointing fourth-quarter results and an even less inspiring near-term outlook.
Specializing in helping affluent customers on short-haul trips to avoid traffic and the needy with essential transportation of human organs, Blade turned heads when its revenue more than doubled in fiscal 2021 and 2022. Last year, sales started to slow, including weaker-than-expected sales. 25% turnover gain in the fourth quarter, it was announced last month.
The $240 million to $250 million revenue target this year is only a 7% to 11% increase, which is also not in line with what the market envisioned. Blade sees a return to double-digit revenue growth in 2025. The losses also persist, but the company has a cash-rich balance sheet, meaning its enterprise value is now lower than its lagging revenue.
Blade sees value in its stock and announces a $20 million share buyback a week after its poorly received financial update. Wood apparently agrees, judging by her decision to expand her position.
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Rick Munarriz has positions in Roku. The Motley Fool holds and recommends positions in Roku and Teladoc Health. The Motley Fool has a disclosure policy.
Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought was originally published by The Motley Fool
