Cathie Wood doesn't take any trading days off. The co-founder and CEO of Ark Invest publishes her transactions for the family of exchange-traded funds she manages. She didn't make a lot of moves on Wednesday, but the ones she did make are worth watching.
Reddit(NYSE: RDDT), Intellia Therapeutics(NASDAQ: NTLA), and PagerDuty (NYSE: PD) were among the four stocks that Wood bought on Wednesday. She added to established positions in all three cases. Let's take a closer look.
1. Reddit
It didn't take long for Wood to own a piece of Reddit. She bought shares of the online community board the day it went public three months ago. She added to the modest stake two months later, the day after it posted blowout quarterly results in its first financial update as a public company. This week is the third time that Ark Invest is putting more money to work in Reddit, even if it remains one of Wood's smallest overall holdings.
Unlike many times when Wood is building up her positions when they're on sale, shares of Reddit moved higher on Wednesday as well as the day following its well-received quarterly report in early May. Reddit went public at $34 in March. It is trading 77% higher today.
Reddit's platform -- a community of online communities -- is sticky and popular. It reaches 82.7 million daily active unique users, a 37% increase over the past year. It's not as successfully monetized as larger social media stocks, but it is taking steps in that direction. Revenue growth of 48% in the first quarter is better than the increase in its audience, so revenue per daily active user is on the rise.
Image source: Getty Images.
Losses have been a problem at Reddit, but it did squeeze out mildly positive free cash flow and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in last month's quarterly report. Analysts see Reddit posting reported profitability by 2026 and generating positive adjusted net income for the first time this year.
The upside is there for the truly global platform. Nearly half of its daily actives are international, but average revenue per stateside user is still more than 4 times higher. It also should now have momentum that comes with better brand awareness of a publicly traded consumer-facing business. Revenue has accelerated for three consecutive quarters, and that was before the IPO.
This has been a rough year for Wood's performance numbers. Many of her top holdings are trading lower this year. However, her decision to buy Reddit early and add to it in subsequent months is paying off so far.
2. Intellia Therapeutics
Wood isn't just adding to her winners. Intellia Therapeutics is down 24% in 2024 and trading 44% lower over the past year. However, the gene-editing stock is moving higher this week.
Intellia investors got a boost this week after after positive test data. Intellia is working on CRISPR-based therapies, including a pair of promising treatments entering the third phase of clinical trials. This week's upbeat news comes from NTLA-2002, a potential single-dose treatment for hereditary angioedema, that is much earlier in the clinical trial process. Angioedema is a rare genetic order that is similar to hives but takes place under the skin. The initial investigational data shows an encouraging 98% mean reduction in monthly swelling attack rate as well as a 99% decrease in severe attacks. It will naturally take time to successfully navigate the process for regulatory approval, but it's obviously bullish for Intellia to have a few promising therapies in development.
Intellia is one of Wood's 12 largest holdings. Ark Invest now owns 10.8% of the stock's outstanding shares.
3. PagerDuty
Like Intellia, PagerDuty is another Ark Invest holding that is showing a double-digit-percentage decline year to date and over the past year. Like Intellia, it also moved higher a couple of days ago following a bullish development. In PagerDuty's case it was a better-than-expected fiscal first quarter it put out near the end of last week that pushed the shares higher.
The cloud-based provider of enterprise analytics and uptime monitoring has posted eight consecutive quarters of sharply decelerating revenue growth, a path that has taken year-over-year top-line gains from 34% to 8%. However, it sees annual recurring revenue growth starting to stabilize, issuing upbeat guidance for the current quarter. With short interest nearing an all-time high, PagerDuty has become a potential short squeeze candidate if it can start to accelerate its revenue growth this year.
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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intellia Therapeutics and PagerDuty. The Motley Fool has a disclosure policy.
