Cathie Wood Likes That New Stock Smell: 3 IPO Stocks She Bought on Monday
Key Points
Cathie Wood added to her positions in Space Exploration, Bullish, and Generate Biomedicines on Monday.
The three stocks have gone public over the past year.
The addition of SpaceX to the Nasdaq-100 on Tuesday should result in a wave of buying from index-tracking funds.
- 10 stocks we like better than Space Exploration Technologies ›
Cathie Wood didn't let last week's holiday-abridged run lull her into slumber. She was actively making moves for her Ark Invest ETFs on Monday. She made a few sells, but let's talk about Ark's purchases.
Ark's co-founder, CEO, and chief investment officer continues to add to her Space Exploration Technologies (NASDAQ: SPCX) position. She also expanded her stakes in Generate Biomedicines (NASDAQ: GENB) and Bullish (NYSE: BLSH) on Monday. All three stocks have gone public over the past year. Let's take a closer look at Wood's latest moves.
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1. SpaceX
Almost a month after its widely followed IPO, SpaceX stock is back to where it was after its first day of trading. On the one hand, SpaceX is currently 19% above its $135 IPO price. On the other hand, the shares are nearly 30% below the peak they set on their third day of trading.
SpaceX joins the Nasdaq-100 index on Tuesday, and that move should drive billions of dollars in passive buying among index-tracking mutual funds and ETFs. It's not a sustainable bullish catalyst, but it should provide some support to what has been a volatile stock in its brief run as a public company.
SpaceX has a real business beyond the hype. It's the category leader in rocket launches, a business that should become even more lucrative as SpaceX makes strides in lowering costs with reusable rockets. Its Starlink platform is the undisputed leader in connectivity, even as Amazon, one of the few companies worth more than SpaceX's $2.1 trillion market cap, is mounting a challenge in that space.
There's no shame in being a polarizing stock. It's been on the market for just four weeks, and analysts already have price targets as low as $62 and as high as $310 on SpaceX. The shares aren't cheap, selling for more than 100 times trailing revenue of $19.3 billion.
However, revenue should roughly double this year, and nearly double again come 2027. Analysts project that SpaceX will turn profitable next year. The valuation is rich, but SpaceX may never be a cheap stock if it can continue to grow at its current pace.
2. Generate Biomedicines
Let's go from a company with a $2.1 trillion market cap to one that's barely above $2.1 billion. Generate Biomedicines is the smallest stock of the three. It's a clinical-stage generative biology company. Generate Biomedicines turns to AI to pursue drug discovery and development in novel protein therapeutics. It's a small name, but it already has Nvidia, the country's most valuable company, as an investor.
The shares are finally trading above their February IPO price of $16, but investors will need patience to see the full growth story play out. Generate Biomedicines has therapeutics candidates in various phases of clinical trials tackling everything from severe asthma to chronic obstructive pulmonary disease. Its asthma candidate, a long-acting potential treatment requiring just a single dose every six months, is already in the third phase of testing. Wood doesn't mind being an early investor. Why do you think she added to three stocks on Monday that weren't even public a year ago?
3. Bullish
The hardest-hit stock on this list is Bullish. Its shares have plummeted 72% since the company went public last summer. You can blame that tumble on the crypto winter that has turned into an equally icy spring and summer.
Bullish plays many roles in the realm of digital currencies. Beyond its own namesake trading exchange, Bullish also offers infrastructure solutions and financial media services. It owns CoinDesk, the popular hub for crypto news and industry events. And it recently announced a $4.2 billion cash-and-stock deal for global transfer agent Equiniti, which is a pretty big deal since Bullish currently has a market cap of just $4 billion.
Bullish still needs a recovery in the crypto market to get back on track. Digital asset sales declined 35% in its latest quarter, even as Bullish leans on acquisitions to deliver overall growth and diversify its revenue streams.
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Rick Munarriz has positions in Nvidia. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.
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