Cathie Wood Is Loading Up on Cash: 3 Stocks She Just Sold

Cathie Wood wasn't in a mood to shop on Thursday. The founder CEO of Ark Invest did nothing but sell securities. She reduced her stake across more than 20 stocks within Ark's five aggressive growth exchange-traded funds (ETFs). She didn't buy a single thing.

Is she raising money because she's expecting the market to get cheaper in the coming weeks? The more likely rationale is that she's raising money to make sure she can participate in the big initial public offerings (IPOs) that are hitting the market in the next few weeks.

She sold shares in Archer Aviation (NYSE: ACHR), Robinhood Markets (NASDAQ: HOOD), and Roku (NASDAQ: ROKU) on Thursday. Let's take a closer look at all three calls to reduce her positions across the three stocks.

Image source: Getty Images.

1. Archer Aviation

The next-gen flying machines that Archer Aviation is championing are designed to take off for short-haul flights in tight spaces. Unfortunately, the same can't be said about Archer Aviation stock. The emerging market for electric vertical takeoff and landing (eVTOL) aircraft has been turbulent lately. The shares have lost more than half of their value over the past year.

Archer is generating negligible revenue and posting substantial losses, but that's not a surprise at this stage in the development process. Archer Aviation is progressing through the rigorous Federal Aviation Administration certification process to bring its Midnight aircraft into the air.

Archer is hopeful that it will be able to launch its premium air taxi service later this year. The clock is ticking. Archer struck a deal to be the official air taxi provider for the 2028 Olympic Games in Los Angeles, and it even bought a small regional airport in the area to improve its chances of a smooth run.

Analysts see revenue rising sharply in the years ahead. It's going to be a dramatic top-line ramp-up, according to the latest Wall Street analyst projections.

• 2026: $9 million
• 2027: $94 million
• 2028: $482 million
• 2029: $1.43 billion

Those forecasts are impressive, but they used to be even more wow-worthy. The market's been paring expectations back over the past few months.

Wood's Ark Invest has been buying the stock on the way down. Why sell now? The stock is cheap. It also has a cash-rich balance sheet to see it through the development phase. Archer's market cap of $4 billion becomes an enterprise value of $2.4 billion when you factor in its strong net cash position. Analysts still believe. The stock would have to double from today's level to hit the average Wall Street price target.

2. Robinhood Markets

Robinhood's online trading platform continues to grow in popularity. The 27.7 million funded accounts it was servicing at the end of May were 7% higher than a year ago. On a more encouraging front, the platform's total assets have soared 48% over the past year to $377 billion.

Robinhood is ramping up its offerings. It's still a popular hub for trading stocks, options, and crypto. It's broadening its appeal by dipping its toes into futures and prediction markets. Robinhood is also ready to make a bigger splash in the IPO market.

You've been able to secure shares of select new offerings for years, but this week Robinhood announced that it has been approved to serve as an underwriter. The timing couldn't be better, just as the new offering pipeline is about to get the first of three IPOs that could top $1 trillion in market caps. There's also been some insider buying lately, making this another odd choice for Wood's hit list.

3. Roku

Finally, we have Roku, another stock that I think Wood might regret paring back on Thursday. Roku posted blowout results this earnings season. The 22% year-over-year increase in revenue was its biggest jump in four years, and well ahead of the 18% it had guided for earlier this year.

Roku's profit also exceeded its earlier outlook. After piecing together four consecutive quarters of positive net income, this is no longer a turnaround story. Investors should be asking how high it can go. The "beat and raise" performance paints a brightening portrait for the pioneer of smart TV operating systems. Concerns about monetization are no longer there, as ad revenue rose 27% to roughly half of its business. Its ad and subscription revenue outpaced the 8% increase in streaming hours.

Scalability is here. Roku's trailing free cash flow has catapulted 81%. With an audience now topping 100 million homes, Roku has never been better. The stock is trading at a quarter of its 2021 peak. This isn't the kind of stock you sell in this environment.

Rick Munarriz has positions in Roku. The Motley Fool has positions in and recommends Roku. The Motley Fool has a disclosure policy.