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Cathie Wood Is Buying Up Red-Hot Invitae (NVTA) Stock

  • Invitae (NVTA) stock soared higher following the release of the company's earnings report.
  • Revenue for the period tallied in at $136.6 million.
  • Shares of NVTA stock are still down about 70% year-to-date (YTD).
DNA molecule in glass tube in hand of scientist on blue. Invitae does genetic testing. NVTA stock
Source: Chepko Danil Vitalevich / Shutterstock.com

Invitae (NYSE:NVTA) stock closed higher by 238% yesterday after the company reported second-quarter earnings. Today, though, NVTA stock is coming back down to earth, declining by more than 45%.

Still, NVTA stock is up by nearly 120% in the past five trading days. Cathie Wood’s Ark Invest reported purchasing 812,943 shares the day before earnings through two exchange-traded funds (ETFs). Before this purchase, Ark last bought shares on June 15.

For Q2, this genetics testing company posted revenue of $136.6 million, up more than 17% year-over-year (YOY). Revenue fell short of the Zacks consensus estimate by just 0.62%; Invitae has only beaten the consensus estimate once in the past four quarters. Unlike revenue, however, adjusted earnings per share (EPS) tallied in at a loss of 68 cents, beating the estimated loss of 74 cents. As of Q2, Invitae had 20,217 active healthcare provider accounts, up about 25% YOY.

As far as full-year revenue guidance goes, the company expects a “low double-digit growth rate.” Management says growth may pick up beyond 2023, with revenue expected to grow between 15% and 25% in the following years. On top of that, the company forecasts cash burn of between $600 million and $650 million this year.

NVTA Stock: Cathie Wood Buys Shares

After the Ark purchases, NVTA stock is now the 45th largest holding across all Ark ETFs out of total of 51. In the ARK Genomic Revolution ETF (BATS:ARKG), the stock is the 40th largest holding out of 49 total. It is also the 33rd largest holding of 35 total in the ARK Innovation ETF (NYSEARCA:ARKK).

Ark reportedly holds a total of 25.14 million shares, with the dollar value of that stake worth $62.73 million according to Cathie’s Ark. However, the firm is sitting on a massive loss, as the cost basis for the stake is $12.30 and $13.49 in the two ETFs that own NVTA stock.

At a closer look, Invitae’s earnings don’t seem to explain yesterday’s massive move. Instead, a short squeeze may be the culprit. As the price of NVTA rose higher yesterday, more shorts capitulated in order to avoid a loss. When short sellers capitulate, they must buy shares of the underlying company.

As of July 31, 51.78 million shares of NVTA were sold short, worth $98.38 million in total. This amounts to 23.10% of the public float being sold short — significant enough to drive a short squeeze.

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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Article printed from InvestorPlace Media, https://investorplace.com/2022/08/cathie-wood-is-buying-up-red-hot-invitae-nvta-stock/.

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