Cathie Wood, the founder of ARK Investment Management, remains a controversial figure in the investment community.
Focused on innovation and disruptive technologies, Wood’s company runs several exchange-traded funds (ETFs) filled with volatile and unproven start-ups. Many are unprofitable and have stocks that regularly go through boom and bust cycles.
Consequently, Wood’s ETFs tend to experience extreme highs and lows. During the pandemic stock market boom, Wood’s ETFs handily beat the broader market. Thus, she was hailed in the business press as a visionary.
Then came the bear market of 2022, and Wood’s funds tanked. Her flagship Ark Innovation ETF (NYSEARCA:ARKK) plunged more than 80% peak to trough, leading to huge outflows of capital.
Now, ARKK stock is up 35% this year as the markets, particularly tech stocks, recover from the 2022 selloff. Still, many of Cathie Wood’s investments remain risky, prompting following investors to proceed cautiously. These are the ONLY three Cathie Wood stocks to consider in August 2023.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) has been a top performing stock this year, and one of the best among the holdings in Cathie Wood’s Ark Innovation ETF.
Year to date, META stock is up 132%, leading most other tech stocks and trouncing the overall market. The outperformance comes as Meta focuses on cutting costs, achieving efficiencies, and delivering strong earnings that exceed Wall Street’s expectations.
An example is Meta’s outstanding Q2 financial results, which beat Wall Street forecasts across the board. The company that runs Facebook and Instagram announced earnings per share of $2.98 versus the expected $2.91. Quarter two revenue totaled $32 billion compared to consensus estimates of $31.12 billion. Fueled by a rebound in digital advertising, Meta reported that its Q2 revenue increased an annualized 11%, the first double-digit growth in that area since late 2021.
Looking ahead, Meta Platforms is preparing the non-smart phone version of its text-based social media platform Threads. This can be seen as a direct counteroffensive move to X (Twitter). The web version of Threads could serve as another catalyst for META stock.
Shopify (SHOP)
Investors hunting for a buy-the-dip candidate should hone in on e-commerce company (and Cathie Wood favorite) Shopify (NYSE:SHOP).
The share price of this tech company has fallen 18% since it reported a second-quarter net loss of $1.3 billion in early August. The latest loss was 8% greater than the net loss of $1.2 billion it recorded a year earlier. While the nearly 20% slide since the Q2 print is disappointing, SHOP stock remains up 64% year over year. In addition, it’s gained 288% in the last five years.
Also, Shopify’s big Q2 loss is almost entirely attributed to restructuring costs. The company laid off 20% of its workforce and sold its logistics business in this year’s second quarter.
The only silver lining in the Q2 print was Shopify’s revenue totaling $1.7 billion, up 30% from $1.3 billion in Q2 of 2022. As for Cathie Wood, she has tended to buy more SHOP stock anytime it slumps, adding more shares to her various ETFs.
Tesla (TSLA)
Electric vehicle maker Tesla (NASDAQ:TSLA) remains Wood’s biggest holding, comprising 10% of the Ark Innovation ETF. While she has sold some TSLA stock in recent months, she continues to bet big on the company and its CEO Elon Musk. That bet certainly has paid off with Tesla’s share price up 115% since January. In spite of Tesla’s stock remaining volatile, Wood has shown that she’s in it for the long haul, seeing EVs as a major disruptor of the automotive industry.
Currently TSLA stock is on an upswing after falling more than 20% after the company’s Q2 print. Tesla has scared investors with aggressive price cuts and incentives in an attempt to win worldwide market share at profit margin expense.
Most recently, the U.S. automaker lowered prices on its Model Y long-range and performance vehicles within China, its most competitive market. Despite the concerns over this strategy, analysts point to upcoming catalysts for Tesla, including the arrival of the company’s long anticipated Cybertruck.
On the date of publication, Joel Baglole did not have (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.
