Down by 62%, Is This Cathie Wood Stock a Screaming Buy Today?

When it comes to buying the dip, Cathie Wood is an expert. And while this stock may be up now, it’s still down from all-time highs.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published July 13, 2023 2:15 pm EDT

When it comes to investing, ARK Innovation ETF (NYSEMKT:ARKK) chief executive officer (CEO) Cathie Wood is one of the best when it comes to betting on beaten-down stocks. The CEO has seen many rebound significantly, buying and selling her firm’s way to riches.

However, while Ark Invest is an American company, Cathie Wood still holds some Canadian companies in her portfolios. And when shares prices have dropped for this one in particular, that’s when Wood swoops in and picks up more.

man touches brain to show a good idea — Source: Getty Images

Up but also down

One example of such an investment by Cathie Wood is Shopify (TSX:SHOP). Shopify stock is currently up 111% in the last year alone, which is amazing! The tech stock continues to recover after dropping significantly from all-time highs. Highs that traded around $228 (adjusted for a stock split). Taking that price into consideration, shares are still down by 62%, as of writing.

In the case of Shopify stock, Cathie Wood has bought and sold back and forth fairly consistently. The firm bought consistently as Shopify stock made a name for itself, starting back in 2017. There were a few selloffs, increasing them at the beginning of the pandemic. Since that time, Shopify stock has come into focus for the investor, with the company buying and selling quarter after quarter.

In the last year alone, Cathie Wood’s ARK Invest sold $1.25 million shares in the fourth quarter of 2022, only to buy back 707,000 in the first quarter of 2023. After the second quarter of 2023, as prices rose higher, they sold off a whopping 5.11 million.

Now, the stock takes up 3.52% of Cathie Wood’s portfolio, with still 8.87 million shares in hand. That’s worth $765,392,300 as of writing! So, what does this investment mean for today’s everyday investor?

Still betting on long-term growth

While Cathie Wood’s firm certainly has sold a lot of its investment in Shopify stock, it continues to bet on the company for long-term growth. In fact, the purchase of 707,000 shares came when prices were at about $50 per share. It was during one of the worst trading days for the company and before the boom, which occurred later on, as the company announced layoffs and the sale of its logistics business.

As you can plainly see, shares have exploded since that time. Shares are still likely to be down overall, as with many Shopify stock investors who have picked up the stock over the years. However, it’s the long-term play that Cathie Wood is after.

Shopify stock continues to beat out earnings estimates quarter after quarter, even after providing a weaker outlook that sent shares down during the first quarter of 2023. The stock is now expected to achieve a record 400% earning jump in the third quarter and a 700% increase in earnings for the full year.

Should that happen, it’s likely there will be more big buys by Cathie Wood in the future on the dip. It seems investors in general are still hot on the company’s tail and believe the focus back on its roots in e-commerce was a great move for the company. And Cathie Wood likely agrees.