Cathie Wood Engages in Cost-Cutting: Stocks She Recently Purchased
Cathie Wood has some ground to cover this year. The co-founder, CEO, and top stock picker at Ark Invest is currently lagging behind the market. Her most popular aggressive growth exchange-traded fund is only up by 3% in 2024, which falls short of the overall market averages. But she's not hanging around.
Wood boosted her stake in Amazon, Archer Aviation, and Joby Aviation earlier this week. Let's delve into three of the 13 stocks she bought on Thursday.
1. Amazon
The US's leading online retailer is presently preoccupied with China. Reports suggest that the US House Select Committee, which is investigating strategic competition between the two nations, summoned Amazon staff for testimony regarding its partnership with Chinese-owned TikTok.
On a more positive note, Amazon launched its Haul platform in beta version this week. This new shopping experience, available within the updated Amazon app, offers a straightforward, discounted shopping experience. Most items on Haul cost less than $10. It's a move to challenge rivals like Shein and Temu, two popular Chinese competitors offering unbeatable prices.
However, the success of Haul could potentially impact Amazon's traditional storefront, which likely has higher margins. With Amazon growing at a slower pace than its Chinese competitors (Shein and Temu), it's worth monitoring how well Haul does. Overall net sales for Amazon increased by 11% in its latest quarter, but domestic e-commerce revenue rose only 9%. By contrast, Temu's parent company reported a 86% increase in its top line in its previous quarterly update.
If anyone is going to disrupt Amazon, it might as well be Amazon itself. The tech giant's Amazon Web Services (AWS) is posting double-digit growth. Earnings per share soared 52% in its latest quarter. With the busy holiday shopping season approaching, the success of Haul is something to keep an eye on. Amazon's guidance indicates growth of 7% to 11% in net sales for the fourth quarter. We'll soon find out if Haul is a hit, a flop, or if it cannibalizes Amazon's traditional storefront. Wood, who has been increasing her stake in Amazon, is optimistic about its prospects.
2. Archer Aviation
Wood is a supporter of the budding field of short-distance air travel. Archer aims to secure an early lead in the electric vertical takeoff and landing (eVTOL) aircraft market, offering quick transport from major airports to densely populated city centers using lightweight aircraft that can reach destinations faster than traffic-jammed alternatives.
Archer shares have dipped by 30% in 2024, but the stock tripled in value last year. In simpler terms, Archer's stock has more than doubled since the start of last year. Despite being a pre-revenue company, it has partner agreements and the potential to revolutionize patient investor portfolios. Like most unproven ventures, it's also quite risky.
Archer shares dropped by 8% on Wednesday after announcing plans to sell $70 million worth of stock. Interestingly, this sum represents less than 4% of Archer's current market value. Wood likely saw an opportunity in the dip.
3. Joby Aviation
We'll round off with Joby Aviation, another early provider of air-taxi services. With a market cap of $4.5 billion, it's the most valuable publicly traded player in this niche.
The eVTOL market is subject to volatility, and Joby is moving along a similar path as Archer. Joby's stock nearly doubled in 2023, but it's softened by 11% this year. Like Archer, it has sufficient funds to weather short-term losses until it gets airborne.
Joby has been making headlines internationally in recent weeks. The future of the industry remains uncertain, and patience will be required to see the trend take off.
Cathie Wood's decision to increase her stake in Amazon reflects her confidence in the company's potential, particularly with the launch of its discounted shopping platform Haul and the growth of Amazon Web Services. This investment strategy is a testament to her approach to finance and investing in companies with strong growth potential.
Archer Aviation's dip in share price this year, despite tripling in value last year, has not deterred Cathie Wood from further investing. Her belief in the company's potential in the electric vertical takeoff and landing (eVTOL) aircraft market underscores her investing philosophy, which values long-term growth opportunities, even in high-risk ventures.
