The Cathie Wood circus keeps making new lows as digital doctor platform Teladoc (TDOC) recorded the biggest drop in shares since its IPO.
At one point, shares were down 45% and this was the day after buying another tranche of over $200 million worth of shares before the earnings came out.
TDOC was a pandemic darling and since then, the stock has done nothing but dive lower.
There is even an inverse ETF to jump on the anti-Cathie Wood bandwagon called Tuttle Capital Short Innovation ETF (SARK).
SARK is almost up 100% year to date showing that as market conditions distort, traders must distort with them.
To stay long tech growth is like throwing money off an apartment balcony.
The lack of understanding Cathie Woods exhibits about the stock market is hard to fathom.
Her go-to excuse is that others “aren’t doing the research.”
We were smack dab in a low-rate environment for a decade when even marginal tech companies would get the benefit of the doubt.
As the goalposts have moved and narrowed, Wood is still sticking to her 5-year time horizon and still explaining to investors that other analysts “aren’t doing their homework.”
This really is a case of the emperor having no clothes if I have ever seen it.
To add insult to injury, she has gone on public television to speak about how she believes the global economy is experiencing deflationary pressures.
No matter what changes to the trading environment, she sticks to her narrow story of deflation and her 5-year time horizon while her investors lose money.
If that’s not enough, she blames the market for not understanding her ARKK fund which is down more than 50% this year.
She claims that many people are “devaluing innovation” and just do not understand innovation like she does.
With an unrelenting belief in her growth strategy, miraculously, another $1.5 billion of inflows have juiced up her fund in 2022.
There are many out there that still think she is a great money manager after her one call of Tesla going up was correct.
Investors have chosen to back her further even with mounting losses and that has now backfired as ETF ARK Innovation ETF (ARKK) appears as if the market has not recognized how smart Cathie Wood is.
ARKK is Teladoc’s largest shareholder with a 12% stake worth.
It’s not just TDOC, but other investments like Roku (ROKU), Zoom Video Communications (ZM), and Shopify (SHOP) whose shares have experienced cataclysmic meltdowns of epic proportions.
Why did TDOC shares perform so poorly?
Higher advertising expenses in the mental health market, as well as an “elongated sales cycle” in chronic conditions as employers and providers of healthcare plans evaluate strategies.
TDOC’s services aren’t as good as first thought.
TDOC also took a $6.6 billion charge for impairment of goodwill, a non-cash charge the company excluded from its adjusted results.
The competition also has increased significantly and many of these first-move advantages are not holding up like they used to in tech.
The recent performance has been met with a bevy of analyst downgrades and tech growth as a sub-sector will have a hard time recovering until a lower interest rate sentiment comes back to sweep up the market.
Still, not a peep out of Cathie Wood on modifying her controversial strategies and that’s when we are staring down a barrel of multiple 50 basis point interest rate rises.
She was photographed partying in the Bahamas at some beach parties the day before the TDOC debacle, apparently, she isn’t bothered that much by her followers losing generation wealth.
If readers want to get back into tech growth after an easing of credit conditions, avoid buying ARKK and just buy a collection of strong tech growth yourself.
