The equity markets have remained under pressure since the beginning of the year, with lingering core inflation and the latest Federal rate hikes. Furthermore, the Fed might announce…
three more interest rate increases this year, extending the bearish market sentiment. Despite the continuing tech rout, Cathie Wood stocks remain highly overvalued. The ARK Innovation ETF (ARKK) has declined 29.4% over the past month.
Popular CNBC host Jim Cramer has shifted his opinion regarding Cathie Woods stocks and warned investors to avoid stocks that Cathie Wood is buying. Furthermore, persistent underperformance of the stocks of concern recently prompted Morningstar analysts to downgrade ARKK from Neutral to Negative.
Given this backdrop, we think overvalued Cathie Wood stocks Roku, Inc. (ROKU), Teladoc Health, Inc. (TDOC), UiPath Inc. (PATH), Intellia Therapeutics, Inc. (NTLA), and Shopify Inc. (SHOP), are best avoided now.
Roku, Inc. (ROKU)
ROKU in San Jose, Calif., and its subsidiaries operate a TV streaming platform. The company operates in two segments–Platform and Player. Its platform allows users to discover and access various movies and TV episodes and live TV, news sports, shows, and others. Currently, Roku has approximately 60.10 million active accounts. The stock has an 8.37% weighting in ARKK.
ROKU’s total net revenue increased 27.8% year-over-year to $733.70 million for the first quarter, ended March 31, 2022. However, its player revenue came in at $86.80 million, down 19.4% year-over-year. Also, its loss from operations came in at $23.49 million, compared to $75.81 million in income from operations in the previous period. The company’s net loss was $26.31 million, compared to a net income of $76.30 million in the prior-year period, while its loss per share came in at $0.19, compared to an EPS of $0.54 in the year-ago period.
In terms of forward EV/S, ROKU’s 3.14x is 42.2% higher than the 2.21x industry average Furthermore, its 3.59x forward P/S is 163.7% higher than the 1.36x industry average.
ROKU’s EPS is estimated to decline 212.5% for the quarter ended Sept. 30, 2022. Its EPS is expected to remain negative in 2022 and 2023. The stock has declined 16% in price over the past month to close Friday’s trading session at $97.84.
ROKU’s POWR Ratings reflect its poor prospects. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. It has an overall D grade, which equates to Sell in our POWR Ratings system.
It has a D grade for Growth, Value, Stability, and Sentiment. Click here to access the additional POWR Ratings for ROKU (Momentum and Quality). It is ranked #54 of 61 stocks in the D-rated Consumer Goods industry.
Teladoc Health, Inc. (TDOC)
TDOC in Dallas, Tex., provides virtual healthcare services in the United States and internationally. The company offers services and solutions covering non-urgent, episodic, chronic, and complicated medical conditions. TDOC has a 4.82% weighting in ARKK.
On April 22, 2022, TDOC announced its agreement with Northwell Health to deliver connected and advanced cum all-inclusive virtual care. However, the collaboration might fall short of optimum profits in the near future.
TDOC’s total revenue increased 24.6% year-over-year to $565.35 million for the first quarter ended March 31, 2022. However, its net loss came in at $6.67 billion, compared to a $199.65 million loss in the previous period. Its loss per share came in at $41.58 compared to a $1.31 loss per share in the prior-year period. Furthermore, its adjusted EBITDA came in at $54.50 million, down 3.7% year-over-year.
In terms of forward EV/EBITDA, TDOC’s 24.96x is 93% higher than the 12.93x industry average. Its 22.70x forward P/CF is higher than the 16.26x industry average.
TDOC’s EPS is expected to decrease by 1,471.8% in 2022. Its EPS is estimated to remain negative in 2022 and 2023. Also, it missed EPS estimates in two of the four trailing quarters. Over the past month, the stock has declined 51.2% in price to close Friday’s trading session at $33.59.
TDOC has an overall D rating, which equates to Sell in our POWR Ratings system. The stock has an F grade for Sentiment and a D grade for Value, Momentum, Stability, and Quality.
We have also rated it for Growth. Click here to access all the TDOC ratings. It is ranked #80 of 83 stocks in the D-rated Medical – Services industry.
Click here to checkout our Healthcare Sector Report for 2022
UiPath Inc. (PATH)
PATH in New York City provides an end-to-end automation platform that offers a range of robotic process automation (RPA) solutions, primarily in the United States, Romania, and Japan. The company provides a suite of interrelated software to build, manage, run, engage, measure, and govern automation within the organization. PATH has a 4.24% weighting in ARKK.
For the fourth quarter, ended Jan. 31, 2022, PATH’s total revenue increased 39.4% year-over-year to $289.70 million. However, its operating loss was $50.88 million, compared to $14.59 million in operating income in the year-ago period. The company’s net loss came in at $63.11 million, compared to $26.26 million in net income in the…
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