Many of the market indexes may be hitting fresh highs, but the same can’t be said of many actual stocks. Shares of Pinterest (NYSE: PINS) and GitLab (NASDAQ: GTLB) are trading more than 30% off their 52-week highs. PayPal (NASDAQ: PYPL) hit a fresh 52-week high on Monday, but it would still have to quadruple from here to revisit its all-time peak.
All three stocks are owned by Cathie Wood’s Ark Invest collection of exchange-traded funds for risk-tolerant growth investors. She added to all three positions on Monday. Let’s take a closer look at Wood’s three latest buys.
1. Pinterest
There’s good news and bad news when it comes to Pinterest. Let’s start with the good news. Pinterest has overcome the swoon after its initial pandemic-era surge in popularity. Users flocked to the visual-discovery engine in 2020 and 2021 to get ideas on everything from recipes to home makeover tips. There was a lull in 2022 as its global audience began heading outside again, but growth is accelerating for the second year in a row.
Year-over-year revenue growth has accelerated in five of the last six quarters. Top-line gains have topped 20% through the first half of this year, something that investors haven’t seen since late 2021. Its audience has widened by 12% over the past year, now clocking in at a record 522 million active accounts. The bottom line is faring even better, as adjusted earnings per share soared 38% in its latest report.
Image source: Getty Images.
Now let’s turn to the bad news. The guidance that Pinterest provided in its latest update was disappointing. The $885 million to $900 million in revenue that it’s modeling for the current quarter is a step down to between 16% and 18% growth. Analysts were holding out for higher.
The counter to the bad news is that Pinterest has been conservative before. It was initially calling for an increase in revenue of just 15% for the second quarter, but it came through with a 21% jump. It also seems to be solving the monetization problem that was dogging the stock back in 2022. Average revenue per user rose 8% in its latest report.
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