For a time, Cathie Wood was the hottest investor on Wall Street. Ark Invest was bringing in billions of dollars in new assets under management. She launched a diversified suite of exchange-traded funds (ETFs) targeting fields such as technology, 3-D printing, medicine, robotics and space.
However, her star has quickly fallen. The flagship fund has now underperformed the relevant comparison, the Nasdaq 100, on virtually all applicable time frames. A February report found that in aggregate, her funds have lost investors billions of dollars. Also, investors are rapidly pulling money out of her ETFs.
It seems that Cathie Wood’s moment has passed. So, investors should strongly consider reducing their exposure to her stocks before losing additional value. These are three Cathie Wood stocks to sell today.
Teladoc Health (TDOC)
Like many of Ark’s picks, Teladoc Health (NYSE:TDOC) was a perfect stock for 2021. With people in isolation as Covid-19 swept the world, they were open to the idea of virtual medicine. Telehealth seemed like a perfect concept, so Teladoc Health shares absolutely skyrocketed.
But then, it made an expensive merger with a key rival, Livongo, which almost immediately destroyed major shareholder value. Teladoc Health would report a shocking $13.7 billion loss in 2022. Most of that came as a write-down on the disastrous Livongo deal.
And now, it seems the telemedicine movement has crashed and burned. Most people prefer seeing a doctor in person unless there are extenuating circumstances. Just over the past week, both Walmart (NYSE:WMT) and giant health insurer UnitedHealth (NYSE:UNH) have announced that they are shutting down their telehealth divisions due to a lack of consumer demand. When the biggest players in the industry say that the business model isn’t working, that should give investors a clear warning.
For the time being, Teladoc Health is still soldiering on. But shares are rapidly losing value, given the company’s massive red ink with no apparent paths to stop the bleeding.
Moderna (MRNA)
Like with Teladoc, Moderna (NASDAQ:MRNA) was briefly a high-flying growth stock but the bull case has long since disappeared.
Moderna was one of the first biotech companies to develop an effective vaccine for the Covid-19 virus. Ultimately, Moderna would go on to earn tens of billions of dollars from this vaccine. Investors would bid MRNA stock up to the stratosphere. They believed the company would continue to thrive following its blockbuster vaccine. But that didn’t materialize.
Vaccine sales collapsed as the pandemic has receded, and people show less interest in taking booster shots. At the same time, Moderna has been unable to find any other meaningful new revenue contributors to make up for the collapse of its core COVID-19 vaccine sales.
As a result, the company’s revenues have plummeted, slumping from $19.3 billion in 2022 to a mere estimated $4.2 billion this year. Not surprisingly, Moderna has fallen into sharply unprofitable territory, with the company losing $4.7 billion in 2023.
Bulls are hoping that the company will develop another winning vaccine sooner or later, but that’s a pretty thin bull case. I expect MRNA stock to eventually settle somewhere around its book value or cash value per share. Those figures are $36 and $23 per share respectively, suggesting the stock has at least two-thirds more downside going forward.
Archer Aviation (ACHR)
Archer Aviation (NYSE:ACHR) is one of several companies manufacturing an electric vertical take-off and landing vehicle (eVTOL). Some people refer to these as flying cars. The premise behind eVTOL is they are more attractive than private helicopters and will greatly expand the urban air taxi marketplace.
A couple of years ago, traders were willing to pay almost any price for unproven business models that promised potentially huge upside if things went well. However, now investors largely shun these sorts of concept stocks. They often have no revenues, large cash burn and unproven commercial business models.
It’s quite possible that Archer Aviation will eventually be able to make it to market with a revenue generating service that attracts customer demand. On the other hand, plenty of reason for doubt brews. And, it doesn’t appear Archer Aviation is likely to try to launch commercial services until its planned 2026 debut in India.
That’s a long time to wait to see if the business model works as we face high interest rates among geopolitical pressures. Unfortunately, ACHR stock is unlikely to pay off anytime soon, making this another Cathie Wood stock to sell today.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
