Cathie Wood is beating the market again so far in 2023, and that leaves growth investors wondering if she can recapture her 2020 performance in a bottle. Her style of investing in disruptors and aggressive growth is paying off lately, but she still has a long way to go to overcome the steep losses her Ark Invest family of exchange-traded funds suffered in 2021 and 2022.
Ark puts out daily transaction reports, so we know what Wood is buying and selling. She kicked off the new trading week by adding to her positions in Tesla (TSLA -3.55%), Intellia Therapeutics (NTLA -0.84%), and Teladoc Health (TDOC 0.30%) yesterday. Let's take a closer look.
1. Tesla
As any fan of fast cars knows, starting lines matter. Tesla bears think they're winning with the stock down 65% since hitting all-time highs in late 2021. Bulls know that they have the long track on lock, with the stock up 472% over the past five years and an 83-bagger since its IPO. Bulls can also celebrate that the shares are up by more than 40% since bottoming out three weeks ago.
Tesla stock is volatile, and that will continue to be the case this week. It reports fresh financials on Wednesday afternoon. A big theme at Tesla is how its margins will hold up after a series of price cuts, a rare sight for a company that has historically jacked up its selling prices instead of going the other way.
Image source: Getty Images.
December itself was an eye opener. Tesla began by offering a $3,750 discount to anyone taking delivery of a Model 3 or Model Y vehicle before the end of 2022. The promotion doubled to $7,500 through the final 11 days of the month. The cherry on top was the addition of three months of its revolutionary Full Self-Driving (FSD) premium platform at no additional cost in the final three days of 2022. Despite the markdowns, it still delivered 15,000 fewer cars for the quarter than what analysts were expecting. More price cuts have followed in its key U.S. and China markets this month.
Tesla stock has been one of Wood's most common purchases in recent weeks. She sees this as an opportunity to recharge her already sizable position in the electric vehicle leader. We'll know soon if it will pay off.
2. Intellia Therapeutics
There's a lot going on in the world of gene editing, and analysts can't seem to agree on which way shares of Intellia Therapeutics will be heading in the near term. Late last week, Silvan Tuerkcan at JMP Securities downgraded the stock, concerned by a lack of 2023 clinical updates. Tuerkcan feels that Intellia moving its in-vivo editing to the U.S. market will be a big milestone, but the downside risk is substantial as regulators weigh in on the process.
There's better news this week. Citi analyst David Lebowitz is lowering his price target on the shares from $48 to $39 on Tuesday, but given the recent price action that finds him upgrading the stock from sell to neutral. Unlike Tuerkcan, who feels the upside is limited at this point, Lebowitz sees a more balanced risk-reward proposition for investors.
We know where Wood stands in this debate. Investing in gene-editing stocks is not for the timid, and she's definitely not the type to shy away from growth potential in emerging industries. She added more Intellia Therapeutics shares to two of her ETFs on Monday.
3. Teladoc Health
The pain is real for Teladoc investors. Shares of the telehealth pioneer are down 91% since peaking two years ago, so it's not exactly the picture of health even after rallying in recent weeks along with most growth stocks. Another thing it has in common with many of the growth leaders is layoffs. It announced last week that it was cutting loose 6% of its workforce.
Teladoc was naturally a market darling in 2020 when pandemic shutdowns forced the medical industry into virtual consultations. It was already a leader there, and from basic consultations with doctors and mental health specialists the platform took off early in the COVID-19 crisis. Revenue has decelerated sharply over the last six quarters, going from 151% year-over-year growth to just 17% in its latest report. Wall Street sees the top-line gains slowing to 14% when it reports later this earnings season.
Slowing growth is better than no growth at all, but the market hasn't been kind to profitless companies. Losses continue despite recent moves to shave expenses, and analysts don't see Teladoc turning that corner until 2026. With the competitive landscape heightening, pricing power will be tested in the realm of telemedicine.
Wood naturally detects a pulse here. She has been adding to her position as it falls, and Teladoc continues to be one of her 10 largest holdings.
