Cathie Wood became a legend in 2020 as the founder, CEO, and chief stock picker for the ARK Invest family of exchange-traded funds (ETFs). Last year was humbling, and 2022 has continued to be painful. However, it shouldn't surprise anyone to see Wood and her ETFs leading the way when the market rotates back into growth stocks. What is Wood buying these days?
Tesla (TSLA -3.55%), Velo3D (VLD -3.65%), and Genius Sports (GENI -3.04%) are three stocks that ARK Invest bought on Thursday, adding to Wood's existing positions. Let's see why she's building up each of those three fast-growing companies.
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Tesla Motors
You can't blame last year's underperformance of ARK Invest's funds on Tesla. The electric vehicle maker beat the market with its 50% gain in 2021, and it was the largest holding among all ARK Invest positions. It was most of her other primary holdings suffering big hits that dragged ARK Invest returns lower last year.
Unfortunately for Wood she spent the second half of 2021 selling shares of the ascending Tesla to add to her sinking positions. Watering the weeds didn't help, and now that Tesla is proving mortal in 2022 she's finally nibbling on the dynamic car manufacturer again. Thursday is the first time that she has added to that position since early June of last year.
It's easy to find the dinner bell. Tesla stock plummeted nearly 12% on Thursday after posting poorly received quarterly results. It was a blowout performance at first glance. Revenue soared a better-than-expected 65%, and the bottom line grew even faster with chunky margins defying the historically weak mark-ups in the automaker industry. However, Tesla defying gravity through the 2021 sell-off in high-growth stocks and uninspiring guidance tripped up the company that Elon Musk has built.
Velo3D
Like Tesla Motors, Velo3D is a stock that Wood added to a pair of ARK Invest ETFs on Thursday. It's not a household name for investors, largely because it didn't hit the public markets until last year. Velo3D is raising the bar in what 3D printing can do with its end-to-end metal additive manufacturing solution. Its platform claims to enable its industrial clients with the parts they need faster and cheaper than before.
It's an easy company to get behind, but Velo3D is still very early in the disruptive process. It has just $23.4 million in trailing revenue, a small haul for a stock commanding a $1 billion market cap. Growth is coming. Revenue nearly quadrupled to $8.7 million in its latest quarter, and it's just getting started. It had bookings of $40 million and another $45 million in preorders by the end of October 2021. Two months ago it was forecasting revenue to soar from an expected $26 million for all of 2021 to $89 million this year.
The stock has been cut in half since peaking in November, something that isn't a surprise with the market backing off from early-stage growth companies that are a couple of years away from profitability. However, with a compelling platform pitch when it comes to the production of high-value metal parts for mission-critical applications, you may want to keep an eye on Velo3D.
Genius Sports
Investors haven't been betting on Genius Sports lately. The stock has plummeted 76% since peaking last May. The provider of data and software solutions for the gambling, sports, and media industries has been discarded along with many of last year's market debutantes.
Genius Sports is living up to its growth hype. It has posted year-over-year revenue growth of 52%, 108%, and 71% in its first three quarters on the market. Live sporting events continue to be a draw for viewers, and Genius Sports is there keeping the score as the stat-keeping partner of several teams and leagues. Analysts see revenue growth slowing to a 33% clip in 2022, but that's still healthy for a stock that has shed more than three-quarters of its peak value.
The stock tumbled 7% on Thursday despite hosting an initially well-received virtual Investor Day presentation. B. Riley analyst David Bain did lower his price target on the shares from $23 to $17, but the stock would have to nearly triple from current levels to hit the revised mark.
Tesla, Velo3D, and Genius Sports are strong growth stocks, but recent pullbacks make them compelling considerations here. ARK Invest's Wood seems to agree that the three stocks -- like her own ETFs -- are ready to overcome their recent setbacks.
