In this article, we discuss the 5 best ARK stocks to invest in. If you want to read our detailed analysis of these stocks, go directly to 12 Best ARK Stocks to Invest In.
5. Unity Software Inc. (NYSE: U)
Number of Hedge Fund Holders: 29
Weight: 4.69%
San Francisco-based 3D development platform Unity Software Inc. (NYSE: U) ranks 5th on the list of 12 best ARK stocks to invest in. Unity Software Inc. (NYSE: U) provides software solutions in developing gaming, gambling, and other mobile apps.
According to the latest data from ARK Investment Management LLC, the hedge fund owned 8,326,331 shares of Unity Software Inc. (NYSE: U) worth $1.04 billion as of August 25, 2021, accounting for 4.69% of the Ark Innovation ETF (NYSEARCA: ARKK).
Unity Software Inc. (NYSE: U) saw its stock rise 11.2% on August 11 as analysts anticipate conservative revenue growth in the third quarter. On August 11, Goldman Sachs analyst Kash Rangan initiated a Buy rating on Unity Software Inc. (NYSE: U) with a $135 price target, noting that the company is well-positioned to benefit from the gaming software industry’s growth.
The company has a market cap of $34.70 billion. In the second quarter of 2021, Unity Software Inc. (NYSE: U) reported an EPS of -$0.02, beating estimates by $0.10. The company’s second quarter-quarter revenue grew 48% year over year to $273.56 million and beat revenue estimates by $30.82 million.
At the end of the second quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $7.26 billion in Unity Software Inc. (NYSE: U), down from 39 in the preceding quarter worth $6.69 billion.
4. Coinbase Global, Inc. (NASDAQ: COIN)
Number of Hedge Fund Holders: 49
Weight: 4.86%
Delaware-based cryptocurrency trading platform Coinbase Global, Inc. (NASDAQ: COIN) ranks 4th on the list of 12 best ARK stocks to invest in. Coinbase Global, Inc. (NASDAQ: COIN) went public on April 14 and had over 68 million verified users at the end of Q2 2021.
According to the latest data from ARK Investment Management LLC, the hedge fund owned 4,165,494 shares of Coinbase Global, Inc. (NASDAQ: COIN) worth $1.08 billion as of August 25, 2021, accounting for 4.86% of the Ark Innovation ETF (NYSEARCA: ARKK).
On August 24, Needham analyst John Todaro gave Coinbase Global, Inc. (NASDAQ: COIN) a Buy rating and a $420 price target, emphasizing the crypto platform’s prospective features including staking and yield bearing products. The stock has gained 14% in the last month.
The company has a market cap of $54.28 billion. Shares of Coinbase Global, Inc. (NASDAQ: COIN) climbed 2.1% following the Q2 earnings result. In the second quarter of 2021, Coinbase Global, Inc. (NASDAQ: COIN) reported an EPS of $6.78, beating estimates by $4.09. The company’s revenue in the second quarter came in at $2.23 billion and beat revenue estimates by $345.98 million. Coinbase Global, Inc. (NASDAQ: COIN) had 8.8 million monthly transacting users in Q2 2021, up from 1.5 million users in Q2 2020.
At the end of the second quarter of 2021, 49 hedge funds in the database of Insider Monkey held stakes worth $2.96 billion in Coinbase Global, Inc. (NASDAQ: COIN), up from 0 in the preceding quarter.
3. Roku, Inc. (NASDAQ: ROKU)
Number of Hedge Fund Holders: 61
Weight: 5.28%
Roku, Inc. (NASDAQ: ROKU) is a TV streaming platform based in California that ranks 3rd on the list of 12 best ARK stocks to invest in. Roku, Inc. (NASDAQ: ROKU) sells streaming players internationally.
According to the latest data from ARK Investment Management LLC, the hedge fund owned 3,292,627 shares of Roku, Inc. (NASDAQ: ROKU) worth $1.17 billion as of August 25, 2021, accounting for 5.28% of the Ark Innovation ETF (NYSEARCA: ARKK).
On August 19, Citi analyst Jason Bazinet maintained a Buy rating and a $410 price target on Roku, Inc. (NASDAQ: ROKU), highlighting the company’s strong growth in platform revenue per account, which increased 46% year over year to $36.46 per user. Shares of Roku, Inc. (NASDAQ: ROKU) jumped 7.5%, year to date.
The company has a market cap of $46.87 billion. In the second quarter of 2021, Roku, Inc. (NASDAQ: ROKU) reported an EPS of $0.52, beating estimates by $0.45. The company’s second-quarter revenue came in at $645.12 million, an increase of 81% year over year, and beat revenue estimates by $29.59 million. Roku, Inc.’s (NASDAQ: ROKU) active accounts increased by 1.5 million quarter over quarter to 55.1 million in Q2 2021. The stock has gained 141% in the past twelve months.
At the end of the second quarter of 2021, 61 hedge funds in the database of Insider Monkey held stakes worth $5.63 billion in Roku, Inc. (NASDAQ: ROKU), down from 63 in the preceding quarter worth $3.78 billion.
In its Q2 2021 investor letter, LRT Capital Management mentioned Roku, Inc. (NASDAQ: ROKU) and discussed its stance on the firm. Here is what the fund said:
“For a long time, we have had a small position in Roku, Inc. (ROKU), and we wanted to give you more information about why we like this company. The small size of the position (approximately 1.9% of our total equity exposure) reflects the stock’s volatility – we size positions inversely to their volatility. This section was written by our intern, Jimmy Qian, with light edits by me. Jimmy is a rising junior at the University of Texas at Austin interested in working in the asset management industry.
Executive Summary
Roku is the leading TV streaming platform in the U.S and globally. The company’s mission is to be the leading company that connects the entire TV ecosystem of viewers, content publishers, and advertisers. Roku’s business model has two parts: selling streaming devices (Player Segment), and selling streaming content such as subscriptions, ads, and video-on demand services (Platform Segment). The Player segment operates with low margins and acts as a gateway to get users hooked on streaming content. The content in turn generates very high margins for Roku, which makes the company’s business model analogous to the razor-razorblades models of success of companies in the past. The Roku platform allows users to personalize their content selection with cable television replacement offerings and other streaming services that suit their budget and needs. The company is focused on improving its scale, engagement, and monetization. First, scale is based upon the number of active accounts. Second, improving engagement grows the number of hours watched for the company. Lastly, monetizing user activity by content subscriptions or advertising drives revenue growth.
Historically, investors viewed Roku as a provider of commoditized hardware. However, we see the business as a provider of a platform for streaming services with ongoing recurring revenues as the company reduces its reliance on hardware sales for profits. In fact, over the past 5 years, the share of revenue coming from hardware sales has shrunk to just 45%, while its contribution to gross profit declined to 19%.1 We believe that the company’s strong competitive advantage is rooted in its high switching cost and scale-based cost advantages. In addition, we believe Roku is only in the beginning stages of its growth both domestically in the United States and internationally where the cord-cutting phenomenon is at least five years behind the U.S. Lastly, Roku’s capital allocation strategy has been exemplary and focused primarily on acquisitions that improve the customer experience and value of its platform. The moat, growth opportunities, and the company’s track record of capital allocation makes us believe that Roku can deliver strong investment returns to shareholders in the upcoming years…”
2. Teladoc Health, Inc. (NYSE: TDOC)
Number of Hedge Fund Holders: 43
Weight: 5.62%
Teladoc Health, Inc. (NYSE: TDOC) is a virtual healthcare company based in New York that ranks 2nd on the list of 12 best ARK stocks to invest in. Teladoc Health, Inc. (NYSE: TDOC) provides telehealth services to businesses and health organizations. In 2020, the company has delivered over 10.5 million virtual medical visits.
According to the latest data from ARK Investment Management LLC, the hedge fund owned 8,616,388 shares of Teladoc Health, Inc. (NYSE: TDOC) worth $1.25 billion as of August 25, 2021, accounting for 5.62% of the Ark Innovation ETF (NYSEARCA: ARKK).
In July, Teladoc Health, Inc. (NYSE: TDOC) teamed up with Microsoft Corporation (NASDAQ: MSFT) to integrate the telemedicine firm’s Solo platform and Microsoft Teams to improve virtual care services for hospitals and health systems.
On April 9, Cowen analyst Charles Ryhee maintained an Outperform rating on Teladoc Health, Inc. (NYSE: TDOC) with a price target of $188 per share, citing an upcoming catalyst in Q4 2021. Shares of Teladoc Health, Inc. (NYSE: TDOC) climbed 4.42% in the last five days.
The company has a market cap of $22.32 billion. In the second quarter of 2021, Teladoc Health, Inc. (NYSE: TDOC) reported an EPS of -$0.58, missing estimates by -$0.04. The company’s second-quarter revenue came in at $503.14 million, up 109% year over year, and beat revenue estimates by $3.29 million. Total virtual medical visits and sessions provided grew 64% to 4.53 million, up from 2.75 million in the second quarter of 2020.
At the end of the second quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $3.57 billion in Teladoc Health, Inc. (NYSE: TDOC), up from 42 in the preceding quarter worth $3.37 billion.
In its Q1 2021 investor letter, mentioned Teladoc Health, Inc. (NYSE: TDOC) and shared their insights on the company. Here is what the fund said:
“Teladoc is a leading play on telemedicine, a hyper-growth market with significant opportunity for increases in utilization accelerated by the COVID19 environment. The company is well-positioned for this evolution in treatment after years of work building out its network of doctors and payors. Its recent merger with Livongo expands the company’s customer base and increases the number of products to cross-sell such as holistic, chronic disease, and second opinion services. International expansion is another significant opportunity.”
1. Tesla, Inc. (NASDAQ: TSLA)
Number of Hedge Fund Holders: 60
Weight: 10.45%
Topping the list of 12 best ARK stocks to invest in is American self-driving car manufacturer Tesla, Inc. (NASDAQ: TSLA). California-based AI company Tesla, Inc. (NASDAQ: TSLA) designs and manufactures smart electric vehicles and energy storage products.
According to the latest data from ARK Investment Management LLC, the hedge fund owned 3,279,477 shares of Tesla, Inc. (NASDAQ: TSLA) worth $2.32 billion as of August 25, 2021, accounting for 10.45% of the Ark Innovation ETF (NYSEARCA: ARKK).
On August 19, the company unveiled its D1 chip, a specialized chip for training artificial intelligence systems in data centers, at AI Day. Tesla, Inc. (NASDAQ: TSLA) also reported that it is developing Tesla Bot, an AI-powered humanoid robot.
On August 20, Wedbush analyst Daniel Ives maintained an Outperform rating on Tesla, Inc. (NASDAQ: TSLA) with a price target of $1,000 per share. Shares of Tesla, Inc. (NASDAQ: TSLA) increased 10% in the previous month.
The company has a market cap of $699 billion. In the second quarter of 2021, Tesla, Inc. (NASDAQ: TSLA) reported an EPS of $1.45, beating estimates by $0.47. The company’s second-quarter revenue came in at $11.96 billion and beat revenue estimates by $559.33 million.
At the end of the second quarter of 2021, 60 hedge funds in the database of Insider Monkey held stakes worth $9.29 billion in Tesla, Inc. (NASDAQ: TSLA), down from 62 in the preceding quarter worth $10.0 billion.
In its Q2 2021 investor letter, Worm Capital LLC mentioned Tesla, Inc. (NASDAQ: TSLA) and discussed its stance on the firm. Here is what the fund said:
“Tesla underperformed in the quarter, but we maintain our high conviction in the long-term thesis on each business model. Much like art or writing, investment research is a continuous process—it never really ends. Prices can move in either direction in any given quarter, but our advantage often comes from knowing the businesses so well that short-term fluctuations in pricing shouldn’t affect our decision-making. On high conviction positions, this patience is often rewarded, which is why research is so valuable to our process.
Tesla is in a class of its own. What many in the market seem to (still) not understand is that Tesla is not a car company so much as a complex manufacturing firm—with significant recurring software potential—growing, in our view, at a targeted rate of 50-100% YoY over the next several years. Unlike any other automotive firm in existence today, Tesla alone is a vertically integrated hardware and software business developing state-of-the-art manufacturing techniques that will revolutionize the auto industry (i.e. its Giga Presses, 4680 cells, etc.). It is a generational company and we anticipate it will eventually be the largest company in the world. Many of the conventional narratives around competition displacing Tesla’s lead are fundamentally flawed, and the many headlines surrounding Tesla’s approach to autonomy are frustratingly superficial. (As an aside, we highly recommend watching Andrej Karpathy’s, Tesla’s head of AI, his recent presentation from June: “Tesla details its self-driving Supercomputer that will bring in the Dojo era”)”.
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