ARK Invest Stock Portfolio: Top 5 Picks

2. Zoom Video Communications, Inc. (NASDAQ:ZM)

Number of Hedge Fund Holders: 44

Zoom Video Communications, Inc. (NASDAQ:ZM) is a California-based company that provides a unified communications platform worldwide. Cathie Wood boosted her stake in Zoom Video Communications, Inc. (NASDAQ:ZM) by 14% in the third quarter of 2022. The ARK Invest portfolio had approximately 11 million shares of Zoom Video Communications, Inc. (NASDAQ:ZM) worth $801.5 million at the end of September, representing 5.58% of the total 13F securities. Cathie Wood has held a position in Zoom since Q4 2020. 

Morgan Stanley analyst Meta Marshall on October 11 downgraded Zoom Video Communications, Inc. (NASDAQ:ZM) to Equal Weight from Overweight with a price target of $90, down from $130. The analyst finds short-term catalysts to be lacking for the stock. Zoom Video Communications, Inc. (NASDAQ:ZM)’s online business is not expected to stabilize until early next year, creating an “overhang” on the stock for the next six months, the analyst told investors.

Among the hedge funds tracked by Insider Monkey, 44 funds reported owning stakes worth $2.96 billion in Zoom Video Communications, Inc. (NASDAQ:ZM) at the end of Q2 2022, compared to 43 funds in the prior quarter worth $3.16 billion. Ken Fisher’s Fisher Asset Management is a notable position holder in the company, with 4.71 million shares valued at $508.8 million. 

Here is what Horos Asset Management had to say about Zoom Video Communications, Inc. (NASDAQ:ZM) in its Q1 2022 investor letter:

“What about the other asset class that has attracted the most attention from the investment community in recent times? Here we can distinguish three major groups. First, those companies without earnings that had convinced investors of their great future growth prospects, pushing up their valuations to irrational levels. A clear example of this, which we mentioned almost two years ago (see here) is Zoom Video Communications (“Zoom”), whose market cap exceeded that of companies such as IBM or came close to that of Cisco Systems. Well, from the time we wrote about this odd situation until today, Zoom shares have collapsed nearly 80%.

Therefore, if interest rates rise (or are expected to rise), company valuations are negatively impacted. This is especially true for those businesses that generate little cash today and the market expects them to generate a lot of cash in the future. Hence the severe losses in companies that promised a lot of cash generation in the future (such as Zoom).”