Cathie Wood is always making moves. The co-founder, CEO, and investment manager of Ark Invest publishes daily transactions for her family of exchange-traded funds. We know what’s she’s selling. More importantly for this column’s purposes, we know what she’s buying.
Wood added to three existing positions to kick off the new trading week, buying more shares in 3D Systems (NYSE: DDD), Blade Air Mobility (NASDAQ: BLDE), and Recursion Pharmaceuticals (NASDAQ: RXRX) on Monday. Let’s take a closer look at her latest purchases, which all happen to be stocks trading for less than $10 a share.
1. 3D Systems
3D Systems isn’t the company that it used to be. It was a rock star a dozen years ago, leading the way of the 3D printing revolution. Now it’s struggling. Revenue is declining for the third year in a row. Its trailing revenue is a third less than it was when its business peaked in 2018.
It’s also one of this year’s biggest losers, shedding more than half of its value in 2024. The pioneer of additive manufacturing has stumbled. It started with a disappointing fourth-quarter report in February. The company fell short of analyst expectations on both ends of the income statement. Then it offered disappointing revenue guidance for all of 2024.
Things got worse.
There was a repeat performance six months later. 3D Systems once again fell short of expectations. If investors were displeased in the springtime, when 3D Systems revealed that it was modeling just $475 million to $505 million in revenue, you can imagine how revised guidance for $450 million to $460 million now sounds.
Investor appetite for 3D printing stocks has cooled. 3D Systems hasn’t delivered an operating profit over the past decade. The one time it did serve up a reported profit in 2021, it was entirely the handiwork of an asset sale. The good news here is that analysts see revenue growing again next year. Losses are also expected to narrow. The long-term bullish catalysts may take some time to emerge, but Wood isn’t afraid to buy on the dip — even when that dip is more like a belly flop.
2. Blade Air Mobility
Blade Air Mobility isn’t a household name to most investors, but it would be if you work at Ark Invest clearing trades. Wood has now purchased shares of the short-range air travel specialist in six consecutive trading days.
Blade Air has a fleet of helicopters that it uses to help hospitals speed up the delivery of vital organs for transplants. This is its largest business, currently accounting for 60% of its revenue mix. The consumer-facing Blade Air — probably the name most people know — is its platform that helps well-to-do travelers go from airports in densely populated cities to helicopter landing pads. The time-saving and traffic-sparing business accounts for 40% of Blade Air’s top line.
Business has decelerated sharply after more than doubling in 2021 and 2022. Year-over-year revenue growth fell to 11% in its latest quarter, and analysts see that figure slowing again to a 4% increase for the third quarter that ended last week. There is still hope here. Losses are narrowing, and it trades at a much lower market cap and revenue multiple than a couple of publicly traded next-gen short-range air travel specialists building out fleets of electric aircraft.
3. Recursion Pharmaceuticals
Wood was an active buyer of Recursion Pharmaceuticals this summer, but she hadn’t added to that position in more than a month before Monday’s purchase. Recursion is a clinical stage techbio company. You probably figured the “bio” part with the name “Pharmaceuticals” in its corporate moniker. The “tech” part is more exciting, but it requires some more explaining.
Recursion is hoping to reinvent the drug discovery process by leveraging AI and machine learning. Its operating system leans on algorithms and searchable relationships to help pick up the pace of potential treatments.
Wood is obviously a believer in the Recursion OS platform. She’s not making a play on the present, given Recursion’s meager $49.6 million in revenue against its $1.8 billion market cap. This is a play on the future, and its move this summer to acquire another AI drug discovery company could help it get to the future faster.
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*Stock Advisor returns as of October 7, 2024
Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool recommends 3d Systems. The Motley Fool has a disclosure policy.
Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought was originally published by The Motley Fool
