[ad_1]
Cathie Wood, founder and CEO of Ark Invest, has become a well-known figure in the financial world. Her wealth management firm eschews traditional investment strategies that often seek short-term gains with safe benchmarks. Instead, Ark focuses on long-term capital growth driven by disruptive technology companies.
Specifically, Ms. Wood and her team run six thematic index funds built around innovative technologies such as automation, blockchain, fintech, and robotics. In total, these funds have invested her $16.5 billion in 122 companies. However, as of the end of December, more than 15% of that total was invested in just two stocks.
- coinbase global (coin 2.21%):9.1%.
- UiPath (path):6.4%.
flagship Ark Innovation ETF exceeded S&P500 (SNPINDEX: ^GSPC) This market-beating performance is especially impressive considering the fund is currently trading 67% below its all-time high.
Either way, Wood and her team clearly have a lot of confidence in Coinbase and UiPath. Here’s what investors need to know about these growth stocks.
Coinbase Global: 9.1% of Ark portfolio
Coinbase provides cryptocurrency exchange and wallet services. Its platform allows retail and institutional investors to trade, stake, and store a variety of crypto assets, and allows users to interact with decentralized applications and dApps across various blockchains. Coinbase primarily makes money through (1) transaction fees and (2) interest. USDC We hold reserves through an agreement with stablecoin issuer Circle. As a result, the company’s business is highly sensitive to market sentiment and interest rates.
Coinbase has always prioritized credibility and reputation, and has been cautious in growing its business. CEO Brian Armstrong recently said, “We remain committed to operating a trusted, secure, and compliant crypto platform, and this is our competitive advantage.” The strategy worked. Coinbase is the most popular cryptocurrency exchange in the United States and the largest by trading volume.
Coinbase reported fairly strong financial results in the third quarter, beating expectations on revenue and bottom line. Sales increased by 14% to $674 million. This reflects a 21% decrease in transaction revenue offset by a 59% increase in subscription and services revenue. The strength in the latter segment was driven by interest income from USDC reserves. Coinbase also made progress towards his GAAP profitability. Its net loss narrowed to $2.3 million, a significant improvement from the $545 million loss it reported last year.
During the quarter, Coinbase continued its focus on international expansion, launching in Canada and registering as a cryptocurrency exchange with the Bank of Spain. While the company expands its market opportunities with each new region, its future is ultimately tied to volatile crypto markets. As a result, Coinbase has been (and likely will continue to be) a volatile stock.
analyst of Lucifer The virtual currency market is expected to reach a market capitalization of $5.8 trillion by 2032, and is expected to grow at an annual rate of 15% over the next nine years. The company also expects Coinbase to grow its share due to brand prestige and international expansion efforts, which means its revenue could certainly grow at a double-digit pace during that period. It means.
In that context, the current valuation of 14.5x sales, which is a premium of 5x average sales over the past two years, is somewhat reasonable. I would wait for Coinbase stock to get cheaper before buying it simply because the current valuation is much higher than its historical average, but I don’t blame investors who bought the stock today.
UiPath: 6.4% of Ark’s portfolio
UiPath specializes in business automation software. Its platform blends robotic process automation (RPA) and artificial intelligence (AI) capabilities to (1) analyze tasks and processes to identify automation opportunities, and (2) automate selected tasks and processes. Build software robots and (3) deploy and manage them. Deploy software robots across your business.
RPA improves operational efficiency by automating simple tasks such as moving files and extracting data from structured forms. AI enhances these capabilities and supports more complex automation, such as understanding and manipulating document data. The platform uses a type of AI known as computer vision to recognize and manipulate user interface (UI) elements, allowing it to automate tasks in most applications, hence the name UiPath.
Consultancy forrester research and gartner The company is consistently recognized as a market leader in RPA software. This is encouraging for shareholders, as RPA is one of the fastest growing areas in the software market, according to . morgan stanley. It’s also worth noting that UiPath is recognized as a leader in the adjacent fields of task mining, process mining, and intelligent document processing software.
UiPath reported fairly strong financial results in the third quarter, but tough economic conditions remained a headwind. Revenue increased 24% to $326 million, and non-GAAP net income more than doubled to $69 million.
Grand View Research expects the RPA market to grow at 40% annually through 2030, with particularly strong demand for mixed RPA and AI solutions. UiPath is responding to that demand with new AI products. For example, Autopilot is a generative AI assistant that allows users to run existing automations or build new automations using natural language.
In that regard, UiPath should be able to achieve solid double-digit sales growth until the end of the decade. As a point of reference, analysts at Morgan Stanley think earnings could grow 21% per year over the next decade. According to this forecast, the current valuation of 9.7 times sales looks reasonable as it is added to the average sales of 11.4 times sales over the past two years. Investors should consider buying a small position in this growth stock today if they plan to hold it for at least five years.
[ad_2]
Source link
