Cathie Wood makes it easy to keep tabs on her aggressive growth stock habits. The co-founder, CEO, and investment manager of the Ark Invest family of exchange-traded funds publishes her transactions at the end of every trading day. She became a widely followed player with monster returns in 2020. She followed back-to-back years of disappointing returns with another market-thumping performance last year.
Things haven’t gone so well in 2024, but it’s not stopping her from fine-tuning her collection of growth stocks day by day. Wood added to her existing positions in Shopify (SHOP 2.95%), Intellia Therapeutics (NTLA 1.01%), and Adaptive Biotechnologies (ADPT -0.86%) on Tuesday. Let’s take a closer look at the stocks that are trading 16% to 29% lower in 2024.
1. Shopify
The online retailing giant is one of Wood’s 10 largest holdings across her combined portfolios, playing a small part in her market-trouncing performance last year as well as this year’s slide. Shares of the e-commerce platform that gives sellers of all sizes a way to get their digital storefronts noticed more than doubled last year. The stock is down 27% in 2024, and a poorly received financial update earlier this month didn’t help.
Revenue rose 23% in the first quarter, or a heartier 29% increase if you back out the logistics business that it unloaded over the past year. This isn’t the reason for the stock plummeting 19% the day it announced results. Top-line results exceeded market expectations. It was also a beat on the bottom line. The problem came in its guidance. Shopify warned that growth for the current quarter will decelerate to the high teens, or the low-to-mid-twenties when adjusted for the lack of its logistics business. Wall Street was holding out for more. At least 14 analysts would go on to lower their price targets on the stock following the May 8 report.
Image source: Getty Images.
Shopify was a rock star for investors, cranking out revenue growth of 47% or better for nearly a decade through the end of 2021. This is shaping up to be the third consecutive year of sub-30% gains on the top line.
There is still a strong business here if you dig deeper. It has delivered three straight quarters of double-digit free-cash-flow margin, and that streak is expected to stretch to four in the current quarter. Revenue growth may be slowing, but Shopify continues to gain market share. Analysts see revenue climbing 21% this year and another 20% come 2025. It may translate into four years of failing to top 30% growth, but an optimist would see it as four years of clearing 20%. Earnings gains should be even stronger.
Wood sees an opportunity in the post-earnings sell-off that has continued to eat away at the stock in the last two weeks. She may not be alone. Goldman Sachs upgraded the stock on Wednesday, feeling that the downticks are overdone.
2. Intellia Therapeutics
Intellia is another major holding across the Ark portfolios. There are only a dozen stocks with a greater weighting. Wood has stakes in a few gene-editing stocks, figuring that owning a basket of its most promising players will pay off even if just one of them makes a major breakthrough.
Like Shopify, Intellia didn’t soar after beating expectations on both ends of the income statement two weeks ago. The good news is that it didn’t move lower on the news, even though the shares are still down 16% year to date.
This isn’t a stock that’s being judged by its quarterly numbers. The real story here is some potentially promising CRISPR-based therapies. Intellia has one treatment entering the critical third phase of clinical trials and will soon have a second. Because of its a cash-rich balance sheet, time is on its side. Wood’s Ark owns a whopping 10.6% of Intellia’s total share count.
3. Adaptive Biotechnologies
Wood added to only four of her existing positions on Tuesday, and three of them were gene-editing stocks. Adaptive Biotechnologies was one of them. She has a smaller position in the genetic sequencing technology specialist than the other additions, but she still owns more than 7% of Adaptive’s shares outstanding.
The stock is trading 29% lower in 2024, but this one moved higher after the company posted financial results two weeks ago. It boosted the midpoint of its full-year revenue guidance for its minimal residual disease (MRD) business, its largest segment. Losses also continue to narrow, but investors still aren’t impressed. Its CFO leaving the company to pursue another opportunity isn’t a good look, but Wood is still a believer.
Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group, Intellia Therapeutics, and Shopify. The Motley Fool has a disclosure policy.