Ark Invest founder and CEO Cathie Wood rose to popularity during the coronavirus pandemic thanks to her successful bets on the most disruptive technology companies. Her representative exchange-traded funds (ETFs) are: Ark Innovation ETF (Arc 5.54%)has soared 153% in 2021, prompting many investors to watch her trading closely as a signal for what to do with their portfolios.
But then the rapid pandemic-driven growth that had benefited much of Wood’s holdings was wiped out, and the stock plummeted.tech heavy NASDAQ Composite Index We entered a bear market in 2022, down 33% for the year.One lesson investors can learn from last year’s market Even the most innovative companies can experience a stock price crash.
But this reality didn’t stop Wood from remaining optimistic about the innovator.here are three beatings growth stock That Wood is still bullish.
The leader in streaming video platforms Roku (Roku 6.58%) has recently dealt with some significant issues and its share price plunged 82% in 2022. Inflationary pressure increased the cost of manufacturing hardware products, and management decided not to pass on those high prices to customers, leading to a negative for hardware. Gross profit for the last six quarters.
Additionally, the downturn in the advertising market is taking its toll Roku’s PerspectiveWhen the US Federal Reserve (Fed) aggressively raised benchmark interest rates last year to combat rapid inflation, many business executives began preparing for a recession. And when the macroeconomic outlook turns negative, companies are the first to cut advertising budgets. In his first nine months of 2022, Roku’s revenue increased 19% year-over-year. For the fourth quarter, which just ended, management expects him to report a decline of 7.5%.
But it’s not hard to see why Wood loves the Roku so much. Offering value to viewers who want easy access to all streaming services in one place, content companies looking to reach a wider audience, and advertisers looking to market in this connected TV environment. To do. Roku’s active accounts grew 16.5% year-over-year in Q3 2022 to reach 70 million. Consumers said he streamed 23.9 billion hours of content on the platform in that quarter alone.
As of December 31, Roku was the fourth largest holding in the Ark Innovation ETF.
Fintech pioneer stock block (SQ 3.25%)formerly known as Square, 61% decrease in 2022and is currently trading at a price-to-sales multiple of 2.6, close to the lowest ever price for that metric.
Given that the digital payments innovator increased its gross margin by 29% and 51% in both the Square and Cash app segments, respectively, in the third quarter, the stock price slump may not be justified. on a year-on-year basis. This is respectable growth in this kind of economic environment.
The Square segment, which processed $50 billion in total payments in the third quarter, is a mission-critical service provider to its customers. Smaller merchants rely on Square as the backbone of their day-to-day operations. Without it, you risk losing sales and customers.
Meanwhile, Cash App is a fast-growing mobile financial app with 49 million monthly active users. It provides a seamless user experience, allowing account holders to process basic financial services such as signing up for a debit card or buying stocks without having to deal with the hassles of traditional banking.
With gross margins reaching $120 billion in 2022 and a market that is growing every year, the potential for both Square and Cash App to ride the long-term trend in electronic payments is almost limitless.
Block is currently the fifth largest holding in the Ark Innovation ETF.
Since going public in April 2021, coinbase global (coin 15.75%) Stocks plunged 84%. The blame may lie on external factors that have eroded public trust in cryptocurrencies, such as the ongoing “crypto winter” and recent high-profile bankruptcies and scandals in the crypto industry.
Since Coinbase generates the majority of its revenue (63% in Q3) from transaction fees, its business is highly influenced by the level of investor interest in digital assets. If cryptocurrency prices are generally rising, Coinbase will have no problem attracting frequent trading users. If the cryptocurrency price crashes like in 2022, the company will have to post a net loss and lay off employees.
However, Coinbase is expected to usher in the next phase of cryptocurrency. At this stage, cryptocurrencies will cease to be primarily assets for financial speculation and will instead be dominated by utilities. That change may be years away, but if decentralized applications and non-fungible tokens take off and become a common part of people’s financial lives, Coinbase will become a staple for many. It’s hard to imagine a world that doesn’t act as a gateway app to access the crypto economy.And in that scenario, an increase in stock prices would be absolutely massive.
As of December 31, Coinbase was the eighth largest holding of the Ark Innovation ETF.