The Worst Nightmare in Cathie Wood Comes True

The Worst Nightmare in Cathie Wood Comes True ...

The world was locked down in 2020.

Covid-19 was declared a global epidemic, but planes stopped flying, bars, gyms, and theaters closed, and people retreated to their homes to wait for the illness they had previously suffered.

Pandemic Stock Surge

Many businesses remained closed, but some -the so-called "pandemic stocks" - saw their stock rise as isolation became a mode of life.

Companies like Teladoc Health (TDOC) - Get Teladoc Health, Inc. Report, Zoom Video Communications (ZM) - Get Zoom Video Communications, Inc. Class A Report, Netflix (NFLX) - Get Peloton Interactive (PTON) - Get Peloton Interactive, Inc. Class A Reportmade the most of social distancing.

The Covid-19 epidemic did not last forever, even if it felt like it might.

Vaccines were developed, the world is reopening, and now many of the pandemic stock stock are seeing their profits floating away on a river ofred ink.

"Stay at home is the Dotcom Boom of today," one observer said recently. "Lots of failures, but some enormous winners will emerge."

Peloton, which grew by 44.8 percent from December 31, sold $35.76 per share and sold it at $18.47 on April 28.

Netflix''s annual subscriber growth slowed for the first time in more than a decade earlier this month. Shares increased by about 67% from December to $199.52 on April 28.

Cathie Wood''s flagship Ark Investment Management (ARKK) - Get Reportis Teladoc, Teladoc''s largest institutional holder, which was responsible for 1% of the virtual healthcare services company''s stock as of March 30.

Is There A Doctor in the House?

Teladoc, Ark''s third largest shareholder, suffered a net loss of $6.7 billion in the first quarter, or a profit of $41.58 per share, and slashed its outlook.

The net''s loss included a non-cash goodwill impairment charge of $6.6 billion, or a loss of $41.1 a share.

Teladoc''s full-year earnings for 2022 were reduced between $2.4 billion and $2.5 billion, according to an earlier estimate of $2.55 billion to $2.65 billion.

The company was also confronted with difficulties resulting from BetterHelp, its direct-to-consumer mental health clinic.

"Over the past several weeks, we''ve seen a lower-than-expected yield on marketing spending for BetterHelp, which represents a reversal of those trends we experienced in 2021 and in the early part of 2022," said CEO Jason Gorevic, according to a transcript of the earnings call.

Gorevic described paid search advertising as a "significant increase in usage of web resources."

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"We believe that smaller private competitors are pursued what we believe is low or no return customer acquisition strategies in an attempt to increase market share," he said.

Gorevic said the company is "seeing our chronic care sales pipeline evolve more slowly than previously."

"It''s still somewhat early in the selling season, but based on how the pipeline has developed in the first four months of the year, we felt it was prudent to update our forecast," he said.

The company''s stock fell by about 42.5% in less than a week, lowering to $33.51 a share on April 28 from $58.25 a share on April 22.

Teladoc''s stock dropped 663.5% of their value since December 31, when they were going for $91.82 and its market capitalization fell by roughly $4 billion to $5.4 billion on April 28.

''''You''''ve Done Nothing But Cost Me Money.''''

Wood, who on April 28, bought 609,665 shares of the badly burned business, was not slow down. During an interview with CNBC, Wood said Teladoc will be a "category killer" for the next five to 10 years.

Zoom is the second-largest shareholder in theArk Innovation EFT, and its share value has dropped by about 44.8 percent from the closing price of $183.91 in December.

Is Cathie Woods still in a position to win or is she just going through a disaster?

"I cant believe I had $ARKK on the top. You have done nothing bust cost me money," one person said of the incident.

"Are we going to sell all $TDOC at a substantial loss as a result of its poor earning report, and you have admitted that you have been wrong," another person asked.

A irate poster shared a video from a fire-worshipping Muppet and stated that "in this week''s newsletter, ARK investors discover they are baggies and will lose all their cash under the guidance of AuntieChrist."

''''Take Your Lumps''''

Doug Kass, a hedge fund manager, wrote in a recent Real Money column that Wood "has slowed dramatically due to a combination of obsession and extremely poor stock selection."

"Woods tries to make the argument for innovation," Kass said. "Unfortunately, the evidence is that she is willing to pay any cost for that innovation, as such, because even if ARK''s large investment in Tesla the fund''s returns would have been even greater."

However, Gita Rao, a senior lecturer in finance at the MIT Sloan School of Management, said Wood is "a great experienced manager."

"She''s not managing a defensive growth fund," she said. "She''s not managing a high-octane growth fund," she said.

Rao pointed out that growth stocks are experiencing the effects of such factors as rising inflation, Russia''s invasion of Ukraine, and the continued effects of the Covid-19 epidemic.

"Even under normal circumstances, inflation and a rise in interest rates are both harmful for growth stocks," she said. "We haven''t had this cycle in a long time."

The current situation, according to she, is "a classic late-cycle transformation out of growth into value."

"We mustn''t forget that these stocks are extremely high, so people were very pleased with them on the way up, and now they are likely to reach fair valuation, but analysts aren''t cutting their estimates enough."

"It''s all about valuation, and right now people are arguing that we need to reconsider the value of these equities," she said.

Woods, according to Rao, is "administrating to a certain direction, and you''ve have to take your lumps."

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