Cathie Wood buys $13.8 million of tumbling tech stock
One of Cathie Wood’s signature moves is to buy when stocks pull back and look for names that she believes will improve over time.
The CEO of Ark Investment Management followed that playbook again last week, buying a technology stock that had fallen 16.3% in the past five trading days.
Wood’s investment strategy has worked well this year, with his funds outperforming major market indexes. Flagship as of November 7 Ark Innovation ETF (ARKK) is up nearly 40% year-to-date, far outpacing the S&P 500’s gain of 14.2%.
Wood built a strong reputation after his Ark Innovation ETF returned 153% in 2020. The same style that produces big gains in a rising market can also bring heavy losses, as in 2022 when the fund fell more than 60%.
These fluctuations weighed on its long-term consequences. As of November 6, the Ark Innovation ETF had a five-year annualized return of -4.07%. S&P 500 According to data, it achieved an annual return of 15.57% in the same period. Morning Star.
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Wood’s investment strategy is simple: Ark ETFs generally target emerging high-tech companies in areas such as artificial intelligence, blockchain, biomedical technology and robotics.
He believes these companies have the potential to reshape industries and deliver outsized long-term returns, but their volatility leads to large fluctuations in the values of Ark funds.
Over the 10 years ending in 2024, the Ark Innovation ETF has wiped out $7 billion from investor wealth, according to a Morningstar analyst analysis. Amy Arnott. This makes it the third biggest wealth destroyer among mutual funds and ETFs in Arnott’s rankings.
Still, Wood remains bullish on the market. In a letter to investors in late April, he dismissed predictions that the recession would last into 2026 and struck an optimistic tone for tech stocks.
“We think consumers and businesses will accelerate the transition to technologically enabled innovation platforms, including artificial intelligence, robotics, energy storage, blockchain technology and multiomic sequencing,” he said.
Not all investors share this optimism. The Ark Innovation ETF saw net outflows of about $1.38 billion in the 12 months through Nov. 6, according to the ETF research firm VettaFi.
On Nov. 5, Wood’s Ark funds purchased 521,867 shares of Pinterest (PINS) worth approximately $13.8 million, following a decline in the social platform’s shares following disappointing earnings and outlook.
Wood is not active in trading Pinterest shares. Its previous move in the stock was in August, when it bought 643,416 shares.
Related: Cathie Wood sells top AI stocks for $21.4M
On Nov. 4, Pinterest shares tumbled 21.76%, wiping out the stock’s annual gains after the company reported third-quarter results that fell short of earnings expectations and offered a soft outlook.
Earnings per share came in at 38 cents on an adjusted basis, falling short of the 42 cents analysts expected. Revenue came in at $1.05 billion, matching estimates.
The company expects revenue of $1.31 billion to $1.34 billion for the fourth quarter. The midpoint of that range came in below Wall Street’s forecast.
Pinterest’s chief financial officer, Julia Donnelly, said during the earnings call that the company saw “ad spending moderate” in the United States and Canada during the quarter. He attributed the slowdown to “larger retailers in the United States” facing tariff-related pressure on their margins.
“We see these broader trends and market uncertainty continuing with the addition of a new tariff impacting the home furnishings category in Q4,” Donnelly said.
However, the report from social media giant Meta showed strong digital ad sales. Third-quarter revenue rose 26% from a year earlier to $51.24 billion, with nearly 98% coming from online advertising. This was the company’s fastest revenue growth since the first quarter of 2024.
Citi lowered its price target on Pinterest to $38 from $50 but maintains a buy rating on the shares.
“These challenges may persist into 26, but we are encouraged by Performance+’s 24% conversion lift, ROAS Bidding accounting for 22% of lower-funnel retail revenue, and the potential for newer Search and Shopping ad products as engagement with Gen Z continues to grow at over 50% of total users,” the analyst wrote in a research report.
“While we acknowledge the challenges advertisers are facing with shares falling nearly 20% following results, we will take advantage of this situation,” the analyst added.
Tesla Inc.: 13.15%
Roku Inc.: 5.84%
Coinbase Global Inc Class A: 5.50%
Crispr Therapeutics AG: 5.10%
Shopify Inc Class A: 4.66%
Tempus AI Inc.: 4.57%
Advanced Micro Devices: 4.33%
Robinhood Markets Inc Class A: 4.31%
Palantir Technologies Inc. Class A: 4.07%
Roblox Corp Class A: 3.93%
Pinterest is not among the Ark Innovation ETF’s top 10 holdings.
Wood has also cut several names recently. Ark funds dropped 56,095 shares of Robinhood Markets (HOOD) for nearly $8 million. Ark Next Generation Fintech ETF sold 11,989 shares of Reddit (RDDT) for approximately $2.4 million, while Ark Fintech Innovation ETF sold 60,808 shares of SoFi Technologies (SOFI) for approximately $1.8 million.
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