Cathie Wood has come under fire since the initial monster returns she produced for her fund holders in 2020. The co-founder, CEO, and investor at Ark Invest has lost badly to the market in two of the past three years, and she's struggling again in 2024.
But that doesn't mean she's standing still. Ark Invest was particularly busy adding to some existing positions last week. Wood was a buyer of Palantir(NYSE: PLTR), UiPath(NYSE: PATH), and PagerDuty (NYSE: PD) last week. Let's take a closer look.
1. Palantir
Most of Wood's Ark Invest funds are trading at double-digit percentage declines this year, but not all of her largest holdings are laggards. Palantir, one of her 10 largest combined holdings, is up 26% so far in 2024.
Palantir is a provider of software solutions for the intelligence community, leaning on artificial intelligence (AI), data science, and machine learning to turn big data into actionable propositions. After three years of decelerating revenue growth, top-line gains have picked up the pace for three consecutive quarters.
The market wasn't happy with Palantir's first-quarter results last month, sending the shares lower. The stock is beating the market this year, but it was trading 60% higher year to date at its springtime peak.
Image source: Getty Images.
Investors weren't happy with the guidance it provided, but there are things far worse than 22% revenue growth that the midpoint of its outlook is suggesting. It would still translate to Palantir's fourth straight period of accelerating year-over-year growth. But Palantir sees the top-line gains slowing in the latter half of 2024.
For now, Palantir is wooing investors as an AI play. It's also making headway as it diversifies from its stronghold as a government contractor. Stateside commercial revenue rose 40% in its latest quarter, roughly twice as fast as the balance of its business.
2. UiPath
The good news is that Wood was a buyer of UiPath on Thursday, as the stock plummeted 34% following a poorly received financial update. It was the largest purchase for five of Ark Invest's exchange-traded funds, so she was definitely buying the dip.
The bad news is that Wood was also a buyer of the robotics and automation software specialist on Tuesday, the day before UiPath posted its first-quarter numbers. In short, Wood bought the precipice before buying the dip. The stock has now shed more than half of its value since that start of the year.
UiPath's 16% growth in revenue for the fiscal first quarter that it announced after Wednesday's market close was actually just ahead of where analysts were perched. The bad news outweighed the slight beat. UiPath hosed down its full-year guidance. It also announced that its CEO was stepping down, rarely a good look for a growing business.
3. PagerDuty
UiPath isn't the only stock that Wood added to last week that is down sharply this year. PagerDuty stock isn't faring as poorly as UiPath, but it's still down 18% in 2024. It was one of her largest purchases on Friday.
PagerDuty is a cloud-based provider of enterprise analytics and uptime monitoring. Business is slowing. The 16% in revenue growth it posted for its fiscal 2024 year that ended in January was half of what it was in each of the two previous years. The pace of the deceleration is even more pronounced on a quarterly basis, including its latest update on Thursday.
Here is PagerDuty's year-over-year revenue growth since the middle of fiscal 2023:
- Q2 2023: 34%
- Q3 2023: 31%
- Q4 2023: 29%
- Q1 2024: 21%
- Q2 2024: 19%
- Q3 2024: 15%
- Q4 2024: 10%
- Q1 2025: 8%
A couple of bullish considerations are that analysts see revenue growth accelerating again later this year and that it has posted double-digit percentage beats on the bottom line over the past year. Unlike Palantir and UiPath, shares of PagerDuty rose on Friday after the latest financial update. Wood isn't only buying on the dips in this market.
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Rick Munarriz has positions in UiPath. The Motley Fool has positions in and recommends PagerDuty, Palantir Technologies, and UiPath. The Motley Fool has a disclosure policy.
