Cathy Wood, founder of Ark Invest, remains a prominent figure in the investment world despite her flagship ETF, Ark Innovation, declining nearly 6% over the past five years, while the S&P 500 index has risen 85%.
Wood argues that her strategy, focused on long-term trends, will ultimately benefit patient investors. Here are three of her recent investments:
Ark recently acquired 245,896 shares of Roku valued at approximately $15 million for the Ark Innovation ETF. This brings the ETF’s total investment in Roku to $562 million, making it the second-largest holding after Tesla. However, Roku’s shares have declined by 34% over the past five years due to slowed growth and increased competition in the streaming services market. Nonetheless, Roku continues to attract more active users and streaming hours, potentially boosting its higher-margin platform business. Moreover, Roku reported positive adjusted EBITDA in 2023, with forecasts indicating significant growth in the coming years.
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Wood also purchased 1.53 million shares of Roblox, now valued at $57 million, making it the fourth-largest holding in the Ark Innovation ETF. Roblox’s platform allows users to create and monetize their own video games, which gained popularity during the pandemic. However, growth slowed as children returned to school, leading to a more than 40% decline in the company’s shares after its debut. Nevertheless, Roblox’s revenues grew by 23% in 2023, and analysts expect continued growth in the coming years, making the company’s shares appear well-valued.
Finally, Wood added 815,239 shares of PagerDuty to the Ark Innovation ETF, now valued at nearly $18 million. PagerDuty’s platform helps IT specialists effectively manage infrastructure issues. The company’s revenues grew by 30% from fiscal 2020 to fiscal 2023 but slowed in fiscal 2024 due to macroeconomic challenges and competition from platforms like Splunk by Cisco and ServiceNow. Despite these challenges, analysts forecast continued revenue growth and adjusted EBITDA for PagerDuty, suggesting the company’s shares are undervalued at 15 times projected EBITDA for the next year. However, some may argue that investing in larger, faster-growing companies like ServiceNow could be a safer option.
