Cathie Wood March 2021 Webinar Call ⇅
#Amazon stock #Passive income #tesla bull #Ark invest etf
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If there's one investor with a knack for finding disruptive stocks that could grow many times their original investment, it's Cathie Wood. The founder and CEO of ARK Investment Management proved her mettle when her five flagship exchange-traded funds (ETFs) each grew by more than 100% last year, beating the broader markets by a country .
Unless you work in the biopharmaceutical industry, you've probably never heard of Schrodinger (NASDAQ:SDGR). The company provides a platform that helps biopharmaceutical companies discover new treatments more quickly than traditional methods. The company's software-as-a-service platform, which incorporates physics, data analytics, predictive analysis, and artificial intelligence, performs state-of-the-art simulations that lead to quicker and cheaper drug development and the discovery of novel treatment options.
Backed by Bill Gates, Schrodinger went public early last year, and the small company has had an impressive start. In 2020, revenue grew 26% year over year, driven by software revenue that increased 39%. Gross profit grew 29%, which helps illustrate the scalability of the company's model, though it's currently still unprofitable.
Its customer metrics are equally impressive. Last year, the number of customers with $1,000 in annual contract value (ACV) grew 16%, while those with ACV of $100,000 grew at 17%. More importantly, however, is that large customers with ACV of more than $1 million grew by 60%, and customer retention clocked in a 99%. If these trends continue, the company has a bright future.
Wood has been consistently adding to the ARK Genomic Revolution (NYSEMKT:ARKG) ETF's position in Schrodinger. With last week's purchases, the company has become a Top 20 position, representing nearly 2% of the $7.67 billion in assets under management.
Schrodinger is sitting in the catbird seat, at the heart of the digital transformation of drug discovery, and with a market cap of just $5 billion, it's easy to envision a path where Schrödinger could grow tenfold.
The real estate industry is also in the midst of a paradigm shift, as it embraces a digital transformation. For example, Opendoor Technologies (NASDAQ:OPEN) developed an app-based platform that makes buying and selling a home a cinch. Homeowners can sell their property directly to Opendoor, which will then renovate and sell the home at a profit, or they can choose to sell to other buyers, all for a flat fee of 5% of the home's value. By eliminating the need for the traditional real estate agent, the company is carving out a growing and profitable niche for itself.
Like many real estate companies, Opendoor was initially hit by the pandemic, but it's staging a comeback. While revenue slipped 46% year over year, the company's gross profit margin grew to 8.5% of sales, up from 6.4%. The pandemic-driven housing boom should help Opendoor further scale its business. The company was still unprofitable in 2020, but it cut its net loss by 15%.
ARK Next Generation Internet (NYSEMKT:ARKW) ETF and ARK Fintech Innovation (NYSEMKT:ARKF) both scooped up shares of Opendoor last week. The company is a significant holding for both funds, representing 2.32% and 2.83%, respectively, of the funds' holdings. The digital revolution is still in the early stages in the real estate industry, and with a market cap of just $13 billion, Opendoor could eventually be a 10-bagger from here.
Skillz (NYSE:SKLZ) is a relative newcomer to the gaming industry, but it has carved out a growing niche for itself in the area of mobile gaming and esports. The company's platform can turn virtually any mobile game into a competition, where players can accumulate points or compete for cash and prizes. Mobile games have found a large and growing audience over the past year.
For the year ended Dec. 31, revenue grew 92% year over year, while gross profit increased by 91%. The company's net loss worsened by 408%, as Skillz races to add new users. The company has determined that the lifetime value of new members far outstrips the cost of adding them now. This will no doubt increase the leverage of its platform, helping multiply future profits. The strategy is working as new players are flocking to the platform. The number of monthly active users grew 121%, although the average revenue per paying monthly active user slipped by about 12%.
Mobile gaming is the fastest-growing segment of the gaming industry. It's already a $68 billion business, and the market is expected to climb to $150 billion by 2025. Wood is no doubt keenly aware of the growing market opportunity, as Skillz is a Top 20 holding of the ARK Next Generation Internet ETF, at 1.75% of the $5.27 billion in funds under management. With Skillz's market cap of just $7 billion, it isn't hard to foresee a path for the stock to increase by 10 times its current value.