Cathie Wood’s Latest Bargain Buy – Down Over 20% YTD

Cathie Wood’s Latest Bargain Buy – Down Over 20% YTD

Latest bargains from Cathie Wood – down over 20% year to date

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Cathie Wood, CEO of ARK Invest, is known for her early insights into pandemic digital trends. She often has unpopular opinions on stocks.

Wood has long supported Shopify, Inc. (NYSE:SHOP), the e-commerce platform operator. However, over the past year, she has reduced her ETF holdings in the company. Recently, Shopify’s stock price saw a sharp decline, prompting ARK Invest to acquire shares again. Here’s a closer look at his perspective.

Shopify’s Q1 Results Sparked a Massive Sell-Off

On May 8, Shopify released its first quarter results. However, these results disappointed investors, causing the share price to fall by 26%.

The company’s second-quarter revenue forecast matches Wall Street expectations. Additionally, Shopify reported a 23% increase in revenue from the previous year. Shopify reversed a $193 million deficit from the previous year, posting a positive operating profit of $86 million in the first quarter. Adjusted earnings per share of $0.20 beat consensus forecasts of $0.17.

However, the company’s gross margin projections have sparked interest. Management anticipated a slight contraction. Second-quarter gross margin is expected to contract by about 50 basis points to around 50.9%. In contrast, Shopify’s gross margin increased from 47.5% in the first quarter of 2023 to 51.4% in the last quarter.

Shopify shares were trading at a price-to-sales ratio of 16 earlier this year; it remained above 13 before the first quarter was released. These high multiples meant that even minor disappointments in quarterly reports could shake investor confidence.

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Shopify falls, but Wood remains optimistic

Shopify sales have grown by double digits every quarter. Plus, it increases profits.

In the first quarter, free cash flow tripled to $232 million. However, the sale of its logistics business temporarily reduces its profits. Shopify expects this move to bring positive results soon.

Management remains confident in the company’s market potential and anticipates growth and profits. Shopify briefly achieved this during the start of pandemic surge. It also has a clear plan with many growth strategies.

Harley Finkelstein, president of Shopify, described it as a “phenomenal year” during a conference call with analysts.

“And as a result, we continue to break down barriers, accelerate the power of entrepreneurship, and fuel the success of our merchants. » he said. “No matter how you look at our business – whether it’s merchants, products or channels – we delivered an incredible fourth quarter to cap off a year of incredible growth. »

In the first quarter, offline gross merchandise volume (GMV) increased 32% year-over-year, outpacing the total increase of 23%. GMV also increased 130% in business-to-business transactions during the quarter.

Representing the share of sales handled by Shopify Payments, Shopify’s gross payments volume climbed to 60% sales in the first quarter compared to 56% the previous year. Accounting for 74% of the company’s overall quarterly revenue, merchant solutions revenue was primarily driven by gross payments volume.

The real opportunity in today’s market

The current high interest rate environment has created an incredible opportunity for income-seeking investors to achieve massive returns, but not through dividend stocks… Some private market real estate investments give retail investors the opportunity to capitalize on these high yield markets. opportunities and Benzinga identified some of the most attractive options to consider.

For example, Base Camp Alpine Notes offers a target APY of 9% with a term of just three months, making it a powerful short-term cash management tool with incredible flexibility. EquityMultiple has issued 61 series of Alpine Notes and has fulfilled all payment and financing obligations without any missed or late interest payments. With a low minimum investment of just $1,000, Basecamp Alpine Notes makes it easier than ever to start building a high-yield portfolio.

Don’t miss this opportunity to take advantage of high yield investments while rates are high. Check out Benzinga’s favorite high-yield deals.

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