Starting off the year on a trading spree, Cathie Wood expanded her Ark Invest collection by acquiring three new stocks. Curiously, all three picks share the initial letter “R,” though it wasn’t a deliberate pirate-themed selection.
- Roku Roku’s stock price soared by over 100% in 2023, catching Wood’s attention despite her inclination toward undervalued assets. Nevertheless, Roku made its way into her initial trio of purchases for 2024.
The streaming giant made an impressive comeback last year. Initially hit hard by losses and sluggish revenue growth due to a weak connected TV advertising market, Roku managed to revive its fortunes. Its mounting popularity and a reversal in top-line performance regained favor among growth investors.
Roku recorded three consecutive quarters of accelerated revenue growth, transforming from stagnant year-over-year results a year ago to a 20% surge in its latest report. Despite the stock’s struggles, the platform expanded its user base to 75.8 million active accounts, marking a 16% increase over the past year and a substantial 34% rise from two years ago. Although engagement remained robust, a downturn in the advertising market hindered growth. However, recent trends indicate a shift, with average revenue per user bouncing back in the latest quarter.
Addressing ongoing losses remains a challenge for Roku. The company’s substantial investments in content and product expansion come at a cost. However, it’s now set to tackle its bottom-line issues, with analysts forecasting a reduction in losses by over 50% in 2024. If Roku can improve margins without compromising user growth or missing out on the ad market recovery, it stands to make considerable gains in the upcoming year.
- Recursion Pharmaceuticals While traditional valuation methods might deem Recursion Pharmaceuticals pricey—a market cap of $2.1 billion and trailing revenue close to $50 million—it appeals to Wood and other investors for its long-term prospects in the early-stage biotech sector.
Recursion sets itself apart as a clinical stage techbio company, leveraging its Recursion OS platform. This operating system utilizes machine-learning algorithms and trillions of biological and chemical relationships to expedite future treatment advancements.
Despite being distant from profitability and substantial revenue, Recursion’s advantageous cash-rich balance sheet lowers its enterprise value to $1.8 billion. Continuously securing deals to expand its platform’s scope and enhance its artificial intelligence endeavors contributes to its growth potential.
- Rocket Lab Navigating the volatile space industry, Rocket Lab USA faced fluctuations after an uncrewed rocket explosion last September. However, two weeks ago, the company’s shares surged following a $515 million contract win with an undisclosed U.S. government client to develop and manage 18 satellites.
The seasoned space services provider’s stock has experienced ups and downs. After the rocket mishap in September, Rocket Lab’s stock closed at $5.30, slightly increasing to $5.31 at the latest trading session. Despite setbacks, the company launched 10 Electron rockets in 2023, achieving a company record of 42 successful launches in its history. Wood’s increased stake suggests confidence in Rocket Lab’s future launches and its potential stock growth.
