Cathie Wood, the renowned stock picker and CEO of Ark Invest, has been making headlines with her recent selling activity. Wood, known for her optimistic outlook on the market, has decided to lighten her positions in some of the hottest stocks of the year – Roku, Tesla, and Nvidia.
Wood has been gradually reducing her stake in Roku since last week, selling small portions of the stock for six consecutive trading days. This move comes after Roku’s impressive financial results caused its shares to skyrocket by 31% in a single day and 51% for the entire month of July. While Wood’s decision to sell may have been timely, with Roku’s stock dropping by 14% in the past six trading days, it’s important to note that she still holds a substantial position in the company. In fact, Wood owns more than 8% of Roku’s total shares outstanding, making it the third-largest position in Ark Invest’s portfolio.
Despite recent fluctuations, Roku’s popularity continues to soar. The company boasts 73.5 million active accounts as of June, more than double its closest competitor, with a 16% year-over-year increase. Additionally, the number of hours streamed by viewers has risen by 21%, indicating growing engagement with the platform. While Roku has experienced consecutive periods of losses, it has managed to bounce back with back-to-back reports of sequential improvement. The key for Roku’s continued success lies in the recovery of the ad market, as it relies heavily on advertising revenue. However, given the company’s strong position as a leading player in the streaming industry and its ability to gain market share, the future looks promising for investors.
Moving on to Tesla, another stock in which Wood has lightened her position, the electric vehicle manufacturer has been on a winning streak this year. Despite facing challenges such as margin-eroding price cuts and a tough market for big-ticket purchases, Tesla’s shares have nearly doubled in value in 2023. The company’s strategy of lowering prices and complying with government regulations to pass on tax credits to buyers seems to be paying off. Tesla saw a 47% increase in revenue in its most recent quarter, its strongest top-line growth rate since last summer. Although the lower car prices have affected the company’s bottom line to some extent, Tesla remains profitable and even reported year-over-year improvements in net income during the second quarter. In terms of Wood’s investment strategy, Tesla holds the largest position in Ark Invest’s portfolio, accounting for a little less than 8% of the total holdings.
Finally, we come to Nvidia, a stock that has seen phenomenal growth this year, nearly tripling in value with a 190% ascent. Nvidia, the leading player in graphics processing units (GPUs) and artificial intelligence (AI) chips, has always been at the forefront of emerging trends, from self-driving cars to virtual reality. While its revenue growth has been sluggish in recent quarters, analysts predict that earnings will more than double and sales will rise by 61% for Nvidia in the current fiscal year. Similar to Roku and Tesla, Nvidia has experienced a massive rally in 2023. Wood has recently reduced her stake in the company, but it remains a significant part of Ark Invest’s portfolio.
Overall, Wood’s decision to sell shares of Roku, Tesla, and Nvidia may seem surprising given the stellar performance of these stocks this year. However, it’s important to remember that Wood retains considerable positions in all three companies. As a growth-focused money manager, Wood continuously evaluates her holdings, making adjustments based on market conditions and her outlook for the future. While short-term fluctuations may be expected, the long-term prospects for these companies remain promising. Investors may want to pay attention to Wood’s moves, as her track record suggests a knack for identifying winning stocks in the ever-changing market landscape.
