3 of Cathie Wood’s Biggest Losers of 2021 That Should Still Be Huge Long-Term Winners

David Gardner, a co-founder of The Motley Fool, often says that “winners win.” And he’s exactly right. However, he would be the first to tell you that winners don’t win all of the time. They have their ups and downs…

Case in point: Cathie Wood certainly qualifies as a winner. Her ARK Invest exchange-traded funds have ranked among the best-performing ETFs in recent years. Not every stock in those funds has delivered a great return so far in 2021, though.

Several of the ARK Invest CEO’s favorites are actually down year to date. Don’t count all of those recent underperformers out just yet, though. These three are among Wood’s biggest losers of 2021, and all should still be huge winners over the long run.

Teladoc Health

Teladoc Health (NYSE:TDOC) shares have fallen more than 15% year to date, and that’s weighing on several of Wood’s ETFs. Teladoc is the top holding in the ARK Genomic Revolution ETF, the second-largest position in the ARK Innovation ETF, and the fifth-largest holding in the ARK Next Generation Internet ETF.

It appears that many investors are focusing only on the negatives for Teladoc. For example, in its Q1 update, the company reported a huge net loss and said that U.S. paid membership in the quarter slipped to 51.5 million from 51.8 million in the fourth quarter of 2020.

However, that’s only part of the story. Teladoc’s total visits and utilization rate continue to climb. And much of that big loss was related to the company’s acquisitions of Livongo and InTouch Health, deals that are already helping drive its revenue growth.

My view is that Teladoc’s downturn will be temporary. The long-term opportunities for the company in virtual care remain exceptionally strong.

Unity Software

Unity Software (NYSE:U) has been an especially poor performer for Wood this year — the stock has plunged more than 30%. The gaming platform leader ranks No. 10 among the ARK Next Generation Internet ETF’s holdings and No. 12 for the ARK Innovation ETF.

The main knock against Unity is its slowing growth rate. In the fourth quarter of 2020, the company reported a 39% year-over-year revenue increase. However, that was weaker than its full-year revenue growth rate of 43%. Even more concerning, Unity provided a full-year revenue guidance range for 2021 anticipating growth of 24% at the midpoint.

I don’t think investors should be worried, though. For one thing, the pandemic boosted Unity’s growth in 2020. It’s not surprising that growth would…

Continue reading at THE MOTLEY FOOL

 

Leave a Reply

Your email address will not be published.