Cathie Wood, who leads ARK Invest, is known to favor disruptive tech stocks. As you might expect, her picks tend to do well under bull conditions and not so well under bear conditions. She’s a risk-taker, and some of her choices might need years to fully come into themselves and reward shareholders.
This week, she’s been investing in Shopify (NYSE: SHOP), Tempus Ai (NASDAQ: TEM), and Oklo (NYSE: OKLO) Should you follow her lead?
1. Shopify: E-commerce is still growing
If you believe that e-commerce is still in its infancy, buying Shopify stock could be a smart move. It’s an e-commerce powerhouse, with millions of merchants that rely on its services to operate online.
It continues to roll out new products, upgrade its services, and target a broader clientele. It’s way ahead of its competition, with 28% of the market for e-commerce software platforms, according to Statista.
Shopify has been undergoing some pressure since it became a household name during the pandemic. It built out too quickly as high demand dissolved, and it’s trying to cut costs and become profitable as demand continues to slow.
But it has an excellent business with happy clients, and it’s still guiding for double-digit growth as profitability improves. In the 2024 first quarter, revenue increased 23% year over year, and it was the third straight quarter of positive free cash flow and operating income.
Shopify stock isn’t cheap, but its valuation has declined as the price drops — shares are down 12% year to date, and it trades at a price-to-sales ratio of 12. Investors are pricing in some growth here, but they clearly see it as justified.
Shares rose this week on news of better-than-expected June retail sales, and as the economy makes a comeback, Shopify could skyrocket. However, at this valuation, any missteps could push it back down.
2. Tempus Ai: Disruptive medical technology
Tempus Ai just had its initial public offering (IPO) in June, and Cathie Wood has been scooping up shares of this hot new stock. With “AI” in the name, it’s sure to capture investor attention.
Tempus uses data, machine learning,…
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