This past year has been extremely challenging for Cathie Wood’s equity funds. The tech-heavy ARK Innovation ETF (ARKK) has been foundering after hitting its peak in February 2021, owing to concerns surrounding the Fed’s hawkish stance, which negatively impacts growth stocks. Furthermore…
the escalating Russia-Ukraine war has led to a sharp spike in commodity prices and U.S. Treasury yields, adding to inflationary pressures. These macroeconomic factors have weighed more broadly on ARK’s equity fund.
During the first quarter of 2022, ARKK was the worst-performing U.S. equity fund, and incurring severe losses in the quarter. A sharp selloff in tech stocks has dragged down the leading ARKK fund. Cathie Wood’s top holdings have been retreating sharply due to the selloff. Yesterday, the fund’s third-biggest holding, Teladoc, tumbled more than 46% in price following a poor earnings report. Investors’ bearish sentiment is evident in ARKK’s 61% decline over the past year.
Given their history of losses, deteriorating fundamentals, and bleak growth prospects, we think it could be wise to avoid Cathie Wood’s stocks Invitae Corporation (NVTA), Teladoc Health, Inc. (TDOC), Zoom Video Communications, Inc. (ZM), and Roku, Inc. (ROKU).
Invitae Corporation (NVTA)
NVTA is a medical genetics company that improves healthcare in the U.S., Canada, and internationally by integrating genetic information into mainstream medicine. The San Francisco company provides digital health solutions and genetic tests in different clinical areas, including hereditary cancer, neurology, cardiology, metabolic conditions, oncology, and rare diseases. It serves patients, healthcare providers, and biopharma companies. The stock has 10.27% weighing in ARK’.
In its fiscal 2021 fourth quarter, ended Dec. 31, 2021, NVTA’s research and development expenses increased 82.6% year-over-year to $131.76 million, while its selling and marketing expenses grew 27.3% year-over-year to $62.21 million. Its loss from operations for the fourth quarter was valued at $214.57 million. The company’s net loss and net loss per share amounted to $205.12 million and $0.90, respectively.
The negative $0.83 consensus EPS estimate for its fiscal year 2022 first quarter, ended March 31, 2022, represents a 47.8% year-over-year decline from the same period in 2021. The stock has declined 66.5% in price year-to-date and 85.8% over the past year. It closed yesterday’s trading session at $5.22.
NVTA’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
NVTA has an F grade for Sentiment. It has a D grade for Quality, Stability, and Momentum. Within the D-rated Medical – Diagnostics/Research industry, it is ranked #47 of 49 stocks.
To see NVTA’s POWR Ratings for Growth and Value, click here.
Teladoc Health, Inc. (TDOC)
TDOC offers virtual healthcare services in the U.S. and internationally. The Dallas, Tex., company provides a portfolio of services and solutions covering episodic, chronic, and medical conditions. TDOC also offers programs and services, including specialty care telehealth solutions, chronic condition management, mental health solutions, and platform and program services. It offers its products and services under the Teledoc, Livongo, and BetterHelp brands. TDOC has an 11.42% weighting in ARK.
TDOC’s total expenses increased 1,243.9% year-over-year to $7.23 billion in its fiscal 2022 first quarter ended March 31, 2022. The company’s loss from operations grew 7,776.2% year-over-year to $6.67 billion. Its net loss before taxes rose 5,826.8% year-over-year to $6.67 billion. Its net loss and net loss per share came in at $6.67 billion and $41.58, respectively, registering an increase of 3,243.1% and 3,074% from the prior-year period.
Analysts expect TDOC’s revenue to amount to $598.58 million for its fiscal year 2022 second quarter, ending June 30, 2022, representing a 19% decline from the prior-year period. The Street expects the company’s loss per share for the fourth quarter, ending Dec. 31, 2022, to come in at $0.46, representing a 619.2% increase year-over-year. It is no surprise that the company has missed the consensus EPS estimates in three of the trailing four quarters.
Shares of TDOC have plunged 77.5% in price over the past six months and 82% over the past year and closed yesterday’s trading session at $33.51.
TDOC’s POWR Ratings reflect its poor prospects. The company has an overall D rating, which translates to Sell in our proprietary rating system.
The stock has an F grade for Sentiment and a D grade for Value, Stability, and Momentum. It is ranked #75 of 83 stocks in the Medical – Services industry.
To see additional POWR Ratings (Growth and Quality) for TDOC, click here.
Zoom Video Communications, Inc. (ZM)
ZM in San Diego, Calif., offers a unified communications platform in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa. The company offers a wide range of platforms, including Zoom Meetings, Zoom Chat, Zoom Rooms, Zoom Hardware-as-a-Service, OnZoom, and Zoom webinars. In addition…
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