Key points:
- ARK Innovation ETF (ARKK) stock rose on Cathie Wood’s latest purchases.
- Wood bought shares in Nvidia, Zoom Video and Roku, which have fallen.
- So, should you follow Wood’s example? Read on to find out.
The ARK Innovation ETF (NYSEARCA: ARKK) stock price edged 0.99% higher after Cathie Wood went on a buying spree and acquired 15,000 NVidia shares, 208,500 Zoom Video, and 250,500 Roku shares.
The investment fund seems to be doubling down on its beaten-down holdings, with Nvidia stock being down 56.4% for the year, Zoom Video stock having fallen 57.2% since January, and Roku having lost 70.8% of its value since the year started.
Also read: A Guide To The Best US S&P 500 Index Funds.
Cathie Wood continues to invest in the beaten-down stocks that made her investment funds famous in 2021 as the high-flying tech and growth stocks reached extreme valuations before this year’s massive selloff.
However, the question on most investors’ minds is, will the former high-flying tech stocks rally higher any time soon, given that the pandemic lockdowns that drove the rally higher in companies such as Zoom Video are no longer there?
Can Zoom Video recover after companies started doing more in-person meetings instead of the video meetings necessitated by the COVID-19 lockdowns? Furthermore, can Roku shares recover as competition in the digital media players segment heats up and the industry matures, leading to lower revenue growth rates?
These are all valid questions that investors must ask themselves before following Cathie Wood’s lead, scooping up shares in the companies she just bought, or even deciding to invest in the ARK Innovation ETF (ARKK).
Investors familiar with the dot-com bubble of the late 90s will remember that many companies never recovered and had to declare bankruptcy or were delisted from the public markets as their businesses evaporated after the bubble burst.
Luckily for investors in Zoom Video, Nvidia and Roku, the three companies have well-known tangible products; hence, they could fare much better than their dot-com counterparts.
Cathie Wood follows Warren Buffett’s investment ethos of buying stocks after falling. So her latest buys could prove to be great investments once the market recovers.
*This is not investment advice.
ARK Innovation ETFX (ARKK) stock price chart.
The ARK Innovation ETF (ARKK) stock edged 0.99% higher premarket to trade at $43.00, rising from Tuesday’s closing price of $42.58.