Shares of UiPath (NYSE:PATH) are in the spotlight following several purchases by Cathie Wood’s Ark Invest. In the month of September, Wood’s exchange-traded funds (ETFs) purchased PATH stock on 38 separate occasions.
For the month, over 8 million shares were purchased in several ETFs, such as the ARK Innovation ETF (NYSEARCA:ARKK) and the ARK Next Generation Internet ETF (NYSEARCA:ARKW). After the purchases, PATH is now the fourth-largest holding among all ARK ETFs with a 4.06% portfolio allocation, equivalent to 43 million shares or a 9.31% ownership stake.
Ark Invest holds UiPath in six of its ETFs, with average costs between $59.95 and $65.19. Using the midpoint of $62.57 means Wood is sitting on massive losses, as the company is currently trading in the $12 range. Furthermore, UiPath has lost more than 65% of its market capitalization since the beginning of the year.
PATH Stock Is Cathie Wood’s New Software Favorite
Meanwhile, a slew of research firms lowered their price targets after the robotics process automation (RPA) company hosted its Investor Day and issued fiscal 2024 guidance of $1.185 billion in revenue, up 18% year-over-year, and $1.36 billion in annual recurring revenue. Revenue came in below the analyst consensus for 23% growth. On Sept. 30, these three firms lowered their targets:
- Wells Fargo: price target lowered to $16 from $22.
- Canaccord Genuity: price target lowered to $14 from $15.
- Cowen: price target lowered to $18 from $20.
Needham analyst Scott Berg believes a lack of visibility is responsible for some of UiPath’s decline. He explained:
“The biggest delta on the revenue expectations appears driven by a lack of Street visibility into deal mix between SaaS and term license where the guidance suggests more than expected SaaS deals which translates to less up front revenue recognized.”
Meanwhile, Mizuho Securities analyst Siti Panigrahi was disappointed by the weak guidance as well. He attributed the weak guidance to restructuring efforts and a change in the company’s go-to-market (GTM) strategy.
On the bright side, Panigrahi added he was encouraged by UiPath’s move to become a platform-driven business, which increased the company’s total addressable market (TAM) to $93 billion from $61 billion. The analyst has a price target of $14 and a “neutral” rating.
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.