Cathy Wood, founder of Ark Invest, remains a prominent figure in the investment industry, despite her flagship ETF, Ark Innovation, having fallen nearly 6% in the past five years, while the S&P 500 index has risen by 85%.
Wood argues that her strategy, focused on long-term trends, will ultimately benefit patient investors. Here are three of her recent investments:
Roku
Wood recently acquired 245,896 shares of Roku, worth approximately $15 million, for the Ark Innovation ETF. This brings the ETF’s total investment in Roku to $562 million, making it the second-largest holding in the fund after Tesla. However, Roku’s shares have declined by 34% over the past five years, as their growth slowed down and competition in the streaming services market intensified. Nonetheless, Roku continues to gain active users and streaming hours, which could stimulate its higher-margin platform business. Additionally, Roku’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is projected to be positive in 2023, with forecasts predicting significant growth in the coming years.
Read more:
Roblox
Wood also purchased 1.53 million shares of Roblox, now valued at $57 million, making it the fourth-largest holding in the Ark Innovation ETF. Roblox’s platform allows users to create and profit from their own video games, which gained popularity during the pandemic. However, growth slowed down when children returned to school, leading to a decline of over 40% in the company’s stock since its debut on the market. Nevertheless, Roblox’s revenues increased by 23% in 2023, and analysts expect continued growth in the coming years, making the company’s shares appear well-valued.
PagerDuty
Lastly, Wood added 815,239 shares of PagerDuty to the Ark Innovation ETF, now valued at nearly $18 million. PagerDuty’s platform helps IT professionals effectively manage infrastructure issues. The company’s revenues have grown by 30% from fiscal year 2020 to fiscal year 2023 but are projected to slow down in fiscal year 2024 due to macroeconomic challenges and competition from platforms like Cisco’s Splunk and ServiceNow. Despite the challenges, analysts forecast continued growth in PagerDuty’s revenues and adjusted EBITDA, making the company’s shares appear undervalued at 15 times the projected EBITDA for the next year. However, some may argue that investing in larger, faster-growing companies like ServiceNow could be a safer option.
