Cathie Wood Invests in Undervalued Stocks Following Poor Financial Reports

Cathie Wood, the prominent investment manager and head of Ark Invest, is known for turning market downturns into purchasing opportunities. Embracing this strategy, she recently bolstered her investment positions in three companies following their less-than-stellar financial updates. Wood increased her holdings in Roku, 10x Genomics, and Intellia Therapeutics, signifying her confidence in their long-term value despite short-term setbacks.

Roku

Shares of Roku, the widely used streaming platform, suffered a significant decline, dropping 35% over nine trading days. The downturn was triggered by a trifecta of challenges: potential competition from Walmart's proposed acquisition of Vizio, underwhelming fourth-quarter results featuring a decrease in average revenue per user, and the finally confirmed Walmart-Vizio deal. Despite these hurdles, Roku remains a leading Ark Invest holding, with a robust user base that averages over four hours of streaming daily on the platform. Although profitability is still challenging, Roku demonstrated a narrowing operation loss and a positive adjusted EBITDA in the latter half of the previous year. While investors may exercise caution, Roku's dominant position in the connected TV advertising space may bode well for its recovery.

10x Genomics

The life sciences company, 10x Genomics, also delivered disappointing quarterly results. While its revenue slightly exceeded expectations, it marked the fourth consecutive quarter with a larger-than-anticipated deficit. Additionally, 10x Genomics' future revenue forecast falls short of analyst predictions, prompting lowered price targets by industry experts. Despite the gloomy forecast, Wood's continued investment may reflect her belief in the company's long-term potential.

Intellia Therapeutics

The gene-editing company, Intellia Therapeutics, also reported financial figures that did not meet expectations. The company is currently not generating significant revenue as it progresses through clinical trials. However, bolstered by a substantial cash reserve, Intellia's market capitalization remains higher than its enterprise value. Wood's stakes surpass 10% of Intellia's shares, underscoring her conviction in the company's prospects. Nevertheless, analysts have been critical following the earnings report, with downgrades and reduced price targets characterizing the immediate response.

Wood, Investment, Stocks