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Cathie Wood Goes Bargain-Hunting: 3 Beaten-Down Growth Stocks She Just Bought

Cathie Wood Goes Bargain-Hunting: 3 Beaten-Down Growth Stocks She Just Bought
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No cute way to wear it: 2021 was a bad year for Ark Invest. The disruptive technology stocks held by their exchange-traded funds (ETFs) at the start of the pandemic only skyrocketed last year.

High-growth stocks were hit hard, but that didn’t stop Ark Invest founder and CEO, Cathy Wood, from buying more. She recently acquired shares to forbid (NYSE: SQ)And Zoom video communication (NASDAQ: ZM), And Coinbase Global (NASDAQ: currency) at a relative discount.

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to forbid

This is the payment processing giant formerly known as Square. Block has expanded its operations beyond square-shaped payment processing devices. One of these processes involves owning a lot of Bitcoin And allowing customers to use the digital wallet service, Cash App to transact with the leading cryptocurrency.

The plunge in cryptocurrency prices sent Block’s stock price down, and that’s not all. Signals from the Federal Reserve point to several rate hikes this year to stifle inflation.

Higher interest rates are generally bad news for high-growth stocks, but that doesn’t stop Wood from buying more Block shares. This is because the Cash app (excluding Bitcoin) and the Square vendor system work very well. For the twelve months ended September 30, gross profit rose 43% year-over-year to $1.13 billion.

It will take more than raising interest rates to seriously alter Block’s growth trajectory. The company kicked off the fourth quarter with the new integrated TikTok service. Now, TikTok business users can link their short viral videos directly to their Square Online Stores.

Zoom video communication

What a difference one year can make. While 2020 was a notable year for Zoom, the stock is down nearly 70% from its peak. Rather than running for exits, Wood was grabbing more shares in the video conferencing platform.

Why is Wood so confident in Zoom’s bounce back? I suspect she’s seeing clear signs that Zoom is here to stay pandemic or not. Stay-at-home orders during the three-month period ending October 31 were relatively benign compared to the previous year. Despite the tough comparisons, top-tier income revenue rose 35% during the company’s fiscal third quarter to $1.05 billion.

Zoom doesn’t seem to be cutting prices to keep customers either. On a GAAP basis, third-quarter operating income rose 51% year over year to $291 million.

Investors will want to keep their eyes open on the changing nature of Zoom’s revenue sources. Traditional companies that desperately need work-from-home solutions can migrate towards video conferencing solutions from traditional enterprise software giants like Microsoft. When it comes to virtual events aimed at general audiences, the broad familiarity with Zoom’s easy-to-use interface will be hard to beat for the foreseeable future.

Coinbase Global

This is one of Ark Invest’s biggest holdings at the moment, and it’s easy to see why Wood is such a great crypto trading platform. It is indeed a cash-generating machine, and its best days are still to come.

Drowning in crypto values ​​and waning enthusiasm for trading those cryptocurrencies isn’t great for Coinbase’s business right now. But the current recession could quickly turn into a hurricane. The number of verified users willing to participate in the next bitcoin trading frenzy rose to 73 million at the end of September, with assets on the platform up 608% year-over-year to $255 billion.

Charging a transaction fee that would make a stock trading platform shy is a nice business, but it’s not the only way Coinbase will make money for the foreseeable future. The company expects this year to launch the NFT market. With a massive user base and $255 billion in assets on the platform, it could quickly become the largest in the world.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis β€” even if it’s our own β€” helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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