3 Stocks Cathie Wood Just Bought at a Lower Multiple
Cathie Wood is one of the
most popular investors
on Wall Street. Wood is the CEO of
Ark Invest which offers multiple growth-focused exchange-traded
funds to investors. After delivering stellar gains in 2020, several
Ark Invest ETFs are now trading in the red due to the ongoing
sell-off in growth stocks.
However, Cathie Wood who is also
the chief investment officer at Ark Invest recently went bottom
fishing and increased exposure to companies such as
Robinhood Markets (NASDAQ:
DKNG), and Cloudflare
NET). Let’s take a look
at the fundamentals of each of these stocks.
Robinhood has been among the
worst-performing stocks on the bourses in the last year as shares
are trading 86% below all-time
highs. In Q1 of 2022, its revenue fell by 43% year over year to
$299 million while its net loss stood at $392 million or $0.45 per
share. In the year-ago period, the company reported a net loss of
Comparatively, analysts forecast
Robinhood to report revenue of $356 million and an adjusted net
loss of $0.36 per share. Robinhood attributed its disastrous
results to a volatile macro-environment which has driven the equity
market lower in 2022.
The performance of Robinhood is
tied to the equity market. So, in a bull run Robinhood should
benefit from higher trading volume while when markets turn bearish,
the company will massively underperform peers.
Analysts tracking HOOD stock now
expect the company’s revenue to decline by 30.6% year over year to
$362 million in the June quarter. Similar to most other high-growth
stocks, Robinhood is also unprofitable and is forecast to report a
loss of $1.24 per share this year.
Valued at a market cap of $6.16
billion, DraftKings is down 79% from all-time highs. However, the
sell-off offers investors an enticing opportunity for investors to
buy the dip as the sports betting market doubled in size in 2021 to
almost $53 billion. Several states in the U.S. have legalized
sports betting in recent months and this trend is bound to gain
pace going ahead.
However, as is the case with
every rapidly expanding market, several companies are now eyeing
this lucrative segment driving up customer acquisition costs and
negatively impacting profit margins.
In fiscal 2021, DraftKings
reported revenue of $1.3 billion while its marketing expenses stood
at $981.5 million. In 2020, its marketing expenses were $495
million. Wall Street now expects sales to rise by 52.5% to $1.98
billion in 2022 and by 33.6% to $2.64 billion in
Comparatively, its loss per share
might narrow from $3.78 in 2021 to $2.26 in 2023.
DraftKings stock is trading at a
discount of 100% compared to average analyst price target
A cloud platform that
interconnects with 10,000 networks that include bit-ticket
enterprises, cloud vendors, and internet service providers,
Cloudflare is valued at $29.2 billion, by market cap. Its stock is
currently trading 59% below all-time highs making it a perfect
contrarian bet for Cathie Wood.
Cloudflare’s robust network
infrastructure offers it a competitive advantage allowing the
company to secure the applications and networks of enterprises. It
faces competition from tech giants such as
AMZN) but it has a few differentiating factors as it
works on on-premise data centers and public cloud that provide
clients visibility and control over their IT networks.
ended 2021 with more than 140,000 paying customers, an
increase of 26% year over year, allowing the company to increase
sales by 52% to $656 million. Its operating cash flow also stood at
$65 million, compared to a loss of $17 million in the year-ago
Cloudflare forecasts its
addressable market to expand to $86 billion in 2022 and $100
billion in 2024, providing it with enough room to improve revenue
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