There are growth investors, and then there's the more aggressive Cathie Wood. The co-founder, CEO, and investment manager for Ark Invest has struggled to duplicate the market-thumping success she achieved four years ago, but she's always moving.
Wood boosted her existing stakes in Amazon (NASDAQ: AMZN), Ibotta(NYSE: IBTA), and Teradyne (NASDAQ: TER) on Monday. Let's take a closer look at these three fresh purchases for Ark Invest's family of exchange-traded funds.
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1. Amazon
Unlike the other two names on this list, Amazon hit another all-time high this month. The leading online retailer is cranking out consistent sales growth in the low double digits, and it continues to invest in new offerings and partnerships to make sure that it stays on top.
Like Wood, Amazon itself is always making moves. Last week it announced that it would be expanding on its earlier investment in promising AI start-up Anthropic. A new $4 billion investment in Anthropic will make the e-commerce giant's Amazon Web Services (AWS) the primary training partner for Anthropic. AWS Trainium will be used to train and deploy Anthropic's largest foundation models. More importantly, it's a shortcut for Amazon to grow from a laggard to a leader in AI, previously a worrywart shortcoming.
Image source: Getty Images.
Amazon shares are doing well, rising 33% this year. This doesn't mean that everything is rosy as Amazon heads into the start of the holiday shopping season later this week. At least one analyst this week is issuing a cautionary note, pointing out that about half of Amazon's produces are China-sourced, making it vulnerable to tariffs likely to be imposed on imports next year.
The launch of Haul in beta version earlier this month also could take a hit. Investors applauded Amazon's new deep discounted platform -- with most products selling for $10 or less -- as a way to take on faster-growing Chinese rivals Temu and Shein. However, where do you think Amazon's procuring products cheap enough to compete with the younger value-priced speedsters?
The good news is that Amazon has a history of overcoming challenges and challengers. Its recent move to hold seller fees in place for 2025 may have been seen by investors as a missed opportunity, with one analyst calling it a $2 billion headwind. However, Amazon tends to stay a step ahead or two ahead of the doubters.
2. Ibotta
Behind most broken initial public offerings (IPOs) there's a bad first impression. Ibotta has failed to wow investors thrice. The company behind the digital marketing platform that offers shoppers rewards for making purchases through its advertising partners has put out back-to-back-to-back "beat and lower" quarterly results. The stock has plummeted 40% from its initial springtime IPO open of $117.
Ibotta's business makes sense for all economic climates. Folks sign up for the cash-back rewards program, scoring dough when they make online or even in-person purchases from an Ibotta retail partner. It works, going by the 15.3 million users who redeemed points for cash in Ibotta's latest quarter. When the economy is rolling, consumers are shopping. When the economy stalls, advertisers should flock to platforms like Ibotta that only charge the brand for actual sales. Unfortunately growth is slowing dramatically on this side of the platform's IPO.
Revenue rose 52% last year. The year-over-year pace has slowed to 43%, 14%, and 16% through the first three quarters of this year respectively. The $100 million to $106 million it's targeting for the current seasonally potent holiday quarter is a mere 4% increase at the midpoint.
3. Teradyne
Shares of Teradyne have surrendered nearly a third of their value since a summertime peak, and that can be a dinner bell for an opportunistic Wood. The maker of chip-testing equipment started to stumble in late July after posting weak guidance following solid second-quarter results.
Its performance fared better last month. Teradyne beat expectations on the top and bottom lines of its admittedly lowered forecast, but this time the midpoint of its revenue and earnings guidance for the current quarter was in line with where Wall Street pros were parked.
Teradyne is coming off of back-to-back years of double-digit declines in revenue, but year-over-year gains have turned positive in the last two quarters. Wood isn't the only one that sees an opportunity here. Two weeks ago, Teradyne's board added another $100 million to its previously announced $2 billion share buyback authorization.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Teradyne. The Motley Fool has a disclosure policy.
