In this article, we discuss 5 Cathie Wood stocks that can rebound in Q4. If you want to see more stocks in this selection, check out 10 Cathie Wood Stocks that Can Rebound in Q4.
5. DraftKings Inc. (NASDAQ:DKNG)
Number of Hedge Fund Holders: 27
Share Price Decline YTD as of August 23: 38.21%
DraftKings Inc. (NASDAQ:DKNG) is a Massachusetts-based digital sports entertainment and gaming company. DraftKings Inc. (NASDAQ:DKNG) stock has gained more than 27% in the last month as of August 23. However, it is still down 38% YTD. The shares rallied amid strong earnings for the second quarter, with a revenue of $466 million, up 56% from last year. This outperformed analyst estimates by $28 million. DraftKings Inc. (NASDAQ:DKNG) reported that average monthly unique B2C customers increased to 1.5 million in Q2, a jump of 30% compared to the same period last year. Securities filings for the second quarter of 2022 reveal that Cathie Wood’s ARK Investment Management owned 25.2 million shares of DraftKings Inc. (NASDAQ:DKNG), worth about $342.5 million, representing 2.02% of the total 13F portfolio.
On August 8, Morgan Stanley analyst Ed Young reiterated an Overweight rating on DraftKings Inc. (NASDAQ:DKNG) and lowered the price target on the shares to $30 from $31 after the company’s Q2 revenues and EBITDA exceeded his estimates by 7% and 35%, respectively. Management seems intent on reducing losses and the analyst lowered his own FY22 EBITDA loss estimate by 8%, informing investors that the “strong quarter” made him more confident in DraftKings Inc. (NASDAQ:DKNG)’s execution. Similarly, on August 17, Roth Capital analyst Edward Engel upgraded DraftKings Inc. (NASDAQ:DKNG) to Buy from Neutral with a price target of $25, up from $18.
Among the hedge funds tracked by Insider Monkey, 27 funds were long DraftKings Inc. (NASDAQ:DKNG) at the end of Q2 2022, with collective stakes worth over $682 million. HG Vora Capital Management is a prominent stakeholder of the company, with 2.5 million shares worth over $29 million.
Here is what Baron Small Cap Fund has to say about DraftKings Inc. (NASDAQ:DKNG) in its Q4 2021 investor letter:
“Shares of DraftKings, Inc. fell in the quarter, as stocks of online gaming companies were under pressure. Sports betting and i-gaming are rolling out with great fanfare and success across the country; however, investors seem concerned about competition and margins. Most participants are spending heavily on marketing and promotions, which is cutting into margins. We see this as a worthy investment in customer acquisition at a moment in time when revenues are just building. We continue to believe that online sports betting and gaming will be enormous industries, and that DraftKings will be a leading player. We think the business will have high margins as it matures. We believe we are underwriting the business conservatively and see much upside in the long term.”
4. Exact Sciences Corporation (NASDAQ:EXAS)
Number of Hedge Fund Holders: 28
Share Price Decline YTD as of August 23: 55.80%
Exact Sciences Corporation (NASDAQ:EXAS) is an American provider of cancer screening and diagnostic test products. ARK Investment Management boosted its stake in Exact Sciences Corporation (NASDAQ:EXAS) by 5% in Q2 2022, holding about 15 million shares worth $745.7 million, representing 4.41% of the total 13F portfolio. The stock has plummeted about 56% year to date as of August 23.
On August 3, Craig-Hallum analyst Alex Nowak reaffirmed a Buy recommendation on Exact Sciences Corporation (NASDAQ:EXAS) but lowered the price target on the shares to $60 from $81. The company provided optimistic comments in its Q1 call and delivered an equally impressive Q2, the analyst noted. Cologuard and Precision Oncology generated sales upside, while COVID sales were in line. The analyst likes the long-term vision of Exact Sciences Corporation (NASDAQ:EXAS) in oncology, though short-term he is “left without a call after a more jumbled quarter”. Piper Sandler analyst David Westenberg on August 17 maintained an Overweight rating on the stock and lowered the price target on the shares to $40 from $50. The analyst updated models in the genomic tools and labs space after earnings.
Among the hedge funds tracked by Insider Monkey, 28 funds were bullish on Exact Sciences Corporation (NASDAQ:EXAS) at the end of June 2022, compared to 32 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with 2.5 million shares worth about $100 million.
Here is what RiverPark Large Growth Fund has to say about Exact Sciences Corporation (NASDAQ:EXAS) in its Q4 2021 investor letter:
“Exact Sciences: EXAS shares declined on a disappointing recovery in Cologuard screening due to COVID. Despite continued revenue growth from Precision Oncology and COVID testing, and Cologuard screening revenue growth of 30%, COVID restrictions limited access to physicians’ offices for the company’s and its Pfizer Joint Venture sales force as well as causing a severe drop off of in-person wellness visits.
In the last year, Exact has also pivoted the company significantly from its single cancer screening tests (Cologuard for colon cancer and Oncotype for breast cancer) to multi-cancer screening through its Thrive acquisition, and to minimal residual disease and recurrence monitoring through its Ashion and Tardis acquisitions. Through this pivot, Exact has tripled its market opportunity from $20 billion to $60 billion.”
3. Ginkgo Bioworks Holdings, Inc. (NYSE:DNA)
Number of Hedge Fund Holders: 29
Share Price Decline YTD as of August 23: 68.87%
Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) is a Massachusetts-based company that operates a platform for cell programming. The platform is used to program cells for novel therapeutics, food ingredients, and chemicals derived from petroleum. Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) stock has plunged about 69% year to date as of August 23. However, the stock has potential to rebound as soon as Q4 as given the importance of cell programming in agriculture to combat the global shortage of food, among other important use cases.
On August 16, Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) stock rose about 21% as the company reported its Q2 2022 results, which included a topline beat and a raised guidance. The company lifted its 2022 revenue outlook to $425 million to $440 million from $375 million to $390 million, which is also above the Street consensus.
Raymond James analyst Rahul Sarugaser on August 16 raised the price target on Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) to $14.50 from $11.50 and kept an Outperform rating on the shares. The company posted Q2 earnings, featuring significant beats on revenue and adjusted EBITDA, leading Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) to raise its guidance for FY22, the analyst told investors. He is optimistic about Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) adding 13 new sector-diversified programs this quarter, reinforcing his confidence that the company should meet its target of 60 new programs added this year.
According to Insider Monkey’s Q2 data, Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) was part of 29 hedge fund portfolios, compared to 30 funds in the earlier quarter.
2. StoneCo Ltd. (NASDAQ:STNE)
Number of Hedge Fund Holders: 30
Share Price Decline YTD as of August 23: 52.17%
StoneCo Ltd. (NASDAQ:STNE) provides financial technology solutions to merchants for conducting e-commerce across in-store, online, and mobile channels in Brazil. In Q2 2022, Cathie Wood’s ARK portfolio had 2.6 million StoneCo Ltd. (NASDAQ:STNE) shares worth $26.5 million. The stock has plummeted about 52% year to date as of August 23. However, the company reported growth in Q2 2022 and expects Q3 revenue and earnings to increase from Q2 levels.
Susquehanna analyst James Friedman on August 23 said StoneCo Ltd. (NASDAQ:STNE) posted solid Q2 results as TPV growth outperformed estimates. The analyst maintained his price target but raised his TPV growth estimate from 16% to 24%. He reaffirmed his Positive rating and a $20 price target on StoneCo Ltd. (NASDAQ:STNE) shares.
According to Insider Monkey’s data, StoneCo Ltd. (NASDAQ:STNE) was part of 30 hedge fund portfolios at the end of June 2022, compared to 43 funds in the last quarter. Warren Buffett’s Berkshire Hathaway is the biggest stakeholder of the company, with roughly 10.7 million shares worth $82.3 million.
Here is what Nordstern Capital has to say about StoneCo Ltd. (NASDAQ:STNE) in its Q2 2022 investor letter:
“‘To grow its customer base, X.com had been giving out lines of credit to prospective customers, part of its plan for a full suite of financial services products. But with X.com expanding as fast as it had, appropriate underwriting had taken a back seat.’ – Jimmy Soni, in ‘The Founders’
StoneCo Ltd. (Stone) today is seen as a payment provider with lower margins than its peers in a structurally difficult environment in Brazil: strong competition, declining take rates, increasing funding costs. The last two quarterly updates indicated improvement in all business lines for Stone and management did forecast further margin increases throughout all of 2022. In contrast to the other payment providers, Stone also has a sizable software business. In addition, Stone is working towards becoming a full-fledged financial services provider. Both endeavors add costs to the P&L, but do not yet add meaningful profits, which is about to change. Particularly the lending business could become bigger and more profitable than the current bread-and-butter payments business. However, the lending business was suspended last year after experiencing issues that resemble those of the early PayPal from more than two decades ago (“X.com” was renamed “PayPal” in 2001)…” (Click here to see the full text)
1. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 60
Share Price Decline YTD as of August 23: 76.13%
Shopify Inc. (NYSE:SHOP) is a Canadian e-commerce company. In the second quarter of 2022, Cathie Wood increased her stake in Shopify Inc. (NYSE:SHOP) by 35%, holding 1.2 million shares worth $455.20 million, representing 2.69% of the total 13F securities. Shopify Inc. (NYSE:SHOP) stock is down 76% year to date as of August 23. However, the increase in consumer spending after July’s inflation data can make the stock rebound as soon as Q4.
On August 11, Atlantic Equities analyst Kunaal Malde upgraded Shopify Inc. (NYSE:SHOP) to Overweight from Neutral with a $46 price target. Shopify Inc. (NYSE:SHOP) remains “a market leader in product innovation and a high-quality market share gainer”, said the analyst, who sees upside to estimates after the latest reset. GMV estimates are now “seemingly more conservative for Shopify than most peers”, leading him to see upside to consensus.
According to Insider Monkey’s database, Shopify Inc. (NYSE:SHOP) was part of 60 hedge fund portfolios at the end of Q2 2022, compared to 72 funds in the earlier quarter. Jim Simons’ Renaissance Technologies is a significant position holder in the company, with 14 million shares worth about $438.50 million.
Here is what Rowan Street has to say about Shopify Inc. (NYSE:SHOP) in its Q2 2022 investor letter:
“Tobias Lutke, Shopify (NYSE:SHOP) Founder and CEO
When Tobias Lütke opened an online snowboarding store in 2004, he realized how painfully cumbersome e-commerce software was. So he decided to create Shopify – a platform that made it easy for anyone to open up an online store.
Tobi has built Shopify into one of the most popular e-commerce platforms in the world, with $175 billion in GMV (Gross Merchandise Value) and $4.6 billion in revenues in 2021. SHOP went public in 2015, when revenues were just slightly above $200 million, and the stock is up 1,233% since its IPO. Shopify stock peaked in November 2021 (traded at astronomical 47x sales), which coincided with peak enthusiasm for the tech-driven, “stay-home” stocks. Since then, the stock is down almost 80% and is currently trading at just 6x 2023E sales. We believe that Mr. Market is offering us an exceptional value, at current price levels, for an exceptional company led by a very talented, visionary founder/CEO.”
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