Cathie Wood did an interesting thing last week as stocks were rallying. The CEO, co-founder, and ace stock picker for the Ark Invest family of exchange-traded funds (ETFs) stood pat on her buying urges. She lightened a few positions last week, but she failed to execute a buy order in any of the final three trading days of last week.
The streak ended on Monday. Shopify (SHOP), Twilio (TWLO), and Adaptive Biotechnologies (ADPT) are the three stocks that Ark Invest bought. What does Wood see in these three fast-growing companies? Let’s take a closer look.
It’s been a rough few months for Shopify investors. The fast-growing e-commerce specialist has seen its stock plunge more than 60% since peaking in November. Shopify stock came back to life with last week’s market rally in growth stocks, but a 12% slide on Monday to kick off this new trading week shows that shareholders are still looking to take profits following sharp upticks.
Revenue growth is slowing at Shopify. Its top line surged 86% in 2020, slowing to a 57% pace in 2021. Growth has decelerated sharply the last three quarters. Shopify itself was vague about its guidance, but analysts are holding out for a 31% increase in 2022. Shopify continues to stand out for its ability to arm merchants of all sizes with the tools to establish an online presence that plays nice with most popular e-commerce and social media platforms.
There is a lot to like about Twilio, the undisputed leader of in-app communication solutions. Twilio’s cloud-based tools help many of the most popular apps be more effective by providing two-way communication with users — for everything from service notifications to verification — without having to leave an app.
It’s growing briskly. Revenue rose 61% in 2021, including a 54% year-over-year uptick for its latest quarter. Acquisitions have helped pad Twilio’s growth over the years. Organic revenue rose a more modest 44% clip last year if you back out the bump in political election season revenue from late 2020, but the appeal of the platform remains strong. Retention rates are still healthy, and Twilio continues to successfully expand its offerings.
It’s been a rough year for Adaptive Biotechnologies. Its CFO resigned in January, and earlier this month the biotech upstart announced that it would be laying off 12% of its staff. The reorganization is part of Adaptive narrowing the focus of its immune system genetic sequencing technology to key in on minimal residual disease and immune medicine.
The stock has been cut by more than half so far in 2022, and it’s down 82% since peaking 14 months ago. The technology is promising, and Adaptive Biotechnologies is one of the stocks that Wood was buying earlier last week before she took a three-day break from purchases. Analysts don’t see the company turning a profit for several more years, but that’s not necessarily a deal breaker for biotech stocks as long as they have the liquidity in place to hold out for a medical breakthrough.
Originally published on Fool.com
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Rick Munarriz owns Twilio. The Motley Fool owns and recommends Shopify and Twilio. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.
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