The popular growth investor bought into one of Thursday’s biggest losers and two stocks that have fallen sharply over the past year.
Cathie Wood can’t seem to string together back-to-back years of success. The Ark Invest co-founder and CEO became a rock star among aggressive growth investors in 2020, only to see her exchange-traded funds fall sharply in 2021 and 2022. She bounced back to beat the market again in 2023, but once again, she’s falling short in 2024.
She’s not going to stop trying. Ark posts its transactions at the end of every trading day, so we know exactly what Wood is buying and what she’s cutting loose. Ark bought shares of Roblox (RBLX 4.45%), Accolade (ACCD -1.10%), and Intellia Therapeutics (NTLA -1.77%) on Thursday, adding to her existing positions. Let’s take a closer look at these three investments.
1. Roblox
Shares of Roblox plummeted 22% on Thursday after posting poorly received financial results. That was a dinner bell for Wood, making the most of the markdown to add to her stake.
Revenue rose 22% to hit $801.3 million in the first quarter, fueled by a 19% surge in bookings. This is a sequential step down from the 30% year-over-year increase it posted back in February, but bookings actually came in just ahead of expectations. Roblox did check in with a loss of $0.43 a share, but that was also better than what Wall Street pros were targeting.
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Guidance tripped up the online gaming platform developer. Roblox may have posted a record free cash flow of $191 million in the first quarter, but it sees that falling to between $16 million and $23 million in the new quarter. Bookings are also expected to decline sharply in the second quarter, and it revised its full-year guidance. It did improve on its earlier forecast for revenue and net loss, but the one thing that stuck with investors was a surprising dip in its bookings forecast.
A platform is only as good as its user-growth engagement, and the projected slowdown in bookings is problematic. Looking back, the first quarter was a success. Roblox had 77.7 million daily active users, a 17% increase over the past year. Average monthly unique payers rose 13% to 15.6 million.
It would certainly be better to see the number of paying accounts outpacing the overall user base, but it’s not a deal breaker. Keep an eye on those trends; clearly, something is happening with its 2024 bookings forecast sliding in the wrong direction.
2. Accolade
Unlike Roblox, Accolade ticked higher on Thursday. It’s still on sale, too. The healthcare benefits specialist has shed nearly 40% of its value this year, cut by more than half since peaking four months ago.
At least five analysts have slashed their price target on the shares after Accolade posted disappointing fiscal fourth-quarter results two weeks ago. It posted a larger loss than expected, and its top-line outlook for the new quarter was light.
One of the five analysts was Richard Close at Canaccord, but he remains bullish on the shares. He points out how the stock has had sharp sell-offs for several consecutive years now and has historically bounced back. He’s obviously not alone in the accolades for Accolade. Wood sees this as a good entry point as well.
3. Intellia Therapeutics
Finally, we have Intellia Therapeutics rising 8% after its own financial update. The stock has shed nearly half of its value over the past year, so it definitely qualifies as being on sale. It posted stronger revenue and a smaller deficit than expected, but it’s not as if this is a top-line story right now.
As a gene-editing specialist, the long-term potential for some of its potential therapies is appealing to patient investors as it clears the clinical-phase trial hurdles. Intellia closed out the quarter with $953 million in cash and marketable securities, so time is on its side as one, and soon two, of its promising therapies go through key phase 3 trials.
Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intellia Therapeutics and Roblox. The Motley Fool has a disclosure policy.