Cathie Wood is having a rough year as the co-founder, CEO and investment manager of Ark Invest. Her largest exchange-traded fund is trading 15% lower this year, a rough contrast to a winning year for many growth investors. She’s not giving up hope. She’s been buying stocks all summer.
Wood added to three existing positions on Thursday, buying more shares in Tempus AI (TEM 2.54%), Blade Air Mobility (BLDE -0.64%), and Absci (ABSI 2.33%) on Thursday. Let’s take a closer look at her latest purchases.
1. Tempus AI
It’s been two months since Tempus AI went public at $37. Wood was a buyer out of the gate, and she’s still building out her position in the provider of practical artificial intelligence (AI) applications for oncologists and academic medical centers. She has now added to her stake in 18 trading days since its mid-June IPO.
Many market debutantes stumble after their opening-day pops. Tempus isn’t one of them. The stock is trading 57% higher than its IPO price. Wood knows it. She’s been selling some of Ark’s weaker investments to throw more weight behind a market winner early in its publicly traded tenure.
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Tempus delivered decent financials in its first quarterly report as a public company last week. Revenue rose a better-than-expected 25%. It also served up less red ink than what analysts were targeting. However, is its current market cap of $9 billion too rich, too soon? This is 13 times the $700 million that Tempus is projecting for all of 2024.
Analysts don’t see Tempus turning a profit until 2027, so investors will have to be patient. The prospects remain promising. Tempus sees an addressable market topping $70 billion for its oncology and neuropsychiatry genomics products. Tempus also has notable investors and a historically successful founder-CEO.
2. Blade Air Mobility
You may not realize that there’s a booming market for short-range air travel, but Wood is invested in a couple of companies building out fleets of helicopters and electric aircraft. Blade Air is a pioneer, starting old-school with traditional helicopters to assist hospitals with the delivery of vital organs in time to perform life-saving transplants. This accounts for nearly 60% of its revenue. The balance of its business comes from whisking affluent travelers out of airports in densely populated cities to landing pads in metropolitan centers, saving them from waiting in roadway gridlock.
Blade Air’s business was booming coming out of the peak of the pandemic. Revenue more than doubled in 2021 and again in 2022, but the top-line gains have decelerated sharply over the past year, going from 71% year-over-year growth in the second quarter of last year to just 11% in its latest financial update earlier this month.
Losses are narrowing. Its flagship business of transporting livers, hearts, and lungs is now generating positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). There will be competitors for a seemingly thin market for on-demand helicopter transport services, but Blade’s advantage is its track record of reliability in a niche that can’t be left up to chance.
3. Absci
It’s probably fitting that two of the three stocks that Wood bought on Thursday are companies using generative AI for healthcare solutions. Absci combines AI with scalable wet lab technologies to help speed up the process of drug creation.
Absci went public three summers ago. It has been trading for a lot longer than Tempus, but it’s a lot smaller with its market cap shy of $500 million. It’s also barely generating revenue, with just $3.3 million in trailing-12-month revenue. Absci has a healthy internal pipeline, but like Tempus it’s several years away from turning the corner of profitability.
Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
