We recently published a list of Ark Invest Stock Portfolio: Top 10 Stocks to Buy. In this article, we are going to take a look at where Shopify Inc. (NYSE:SHOP) stands against other top stocks to buy from Ark Invest’s portfolio.
ARK Investment Management LLC, commonly known as ARK Invest, is an American investment management firm headquartered in St. Petersburg, Florida. Founded by Cathie Wood in 2014, the firm specializes in actively managed exchange-traded funds (ETFs) focused on disruptive innovation. As of Q4 2024, ARK holds over $12 billion in 13F securities, with its top ten positions comprising slightly over 50% of its diversified portfolio, which typically comprises between 35 and 55 holdings. The firm’s investment approach spans various market capitalizations, sectors, and geographies, aiming to identify and invest in companies poised to lead in transformative technological advancements.
Cathie Wood, born Catherine Duddy Wood in 1955, is widely recognized as one of the most influential figures in the investment industry. As the founder, CEO, and chief investment officer of ARK Investment Management, she has carved out a reputation for her innovative and forward-thinking investment strategies. Wood’s approach to investing has consistently focused on identifying and capitalizing on disruptive innovation, setting her apart as a visionary in the financial sector.
After graduating from the Notre Dame Academy Catholic girls’ school, Wood pursued higher education at the University of Southern California (USC), where she earned a summa cum laude degree in finance and economics in 1981. She later completed a Master of Business Administration in finance at USC’s Marshall School of Business. A key influence in her academic journey was economist Arthur Laffer, known for the Laffer Curve, which theorizes the relationship between tax rates and tax revenue. Laffer’s mentorship helped shape Wood’s understanding of economic theory and her investment philosophy.
Wood’s career in finance took off after graduation, with roles at prestigious firms such as Jennison Associates, where she spent 18 years in various leadership roles, and Capital Group, as an assistant economist. At AllianceBernstein, where she managed over $5 billion, she honed her ability to identify long-term growth trends. Despite criticism of her investment decisions during the 2008 financial crisis, Wood remained steadfast in her belief that disruptive innovation would drive the future of economic growth. She later went on to co-found Tupelo Capital Management, a hedge fund focused on global thematic strategies.
In 2014, Cathie Wood founded ARK Invest with the goal of focusing exclusively on disruptive innovation and seizing the investment opportunities it generates. Her pioneering move involved structuring actively managed investment strategies as exchange-traded funds (ETFs), an industry-first approach that allowed a broader range of investors to participate in emerging technologies. She recognized that investing in such transformative technologies requires active management to navigate rapid changes, an open research ecosystem unrestricted by sectors, geographies, or market capitalizations to capture technological convergence, and the sharing of knowledge to deepen understanding of emerging industries. Reflecting these principles, ARK stands for Active Research Knowledge—a philosophy that underpins the firm’s investment approach.
Accordingly, ARK’s investment philosophy is centered around thematic investing in disruptive innovation, leveraging over 40 years of experience in identifying high-growth opportunities. ARK defines disruptive innovation as the introduction of technologically enabled products or services that significantly alter existing industries. The firm’s research process focuses on cross-sector innovations such as artificial intelligence, autonomous vehicles, Fintech, robotics, energy storage, DNA sequencing, 3D printing, and blockchain technology. ARK’s goal is to seek long-term capital appreciation by investing in these cutting-edge industries, believing that companies driving technological advancements will fundamentally reshape industries and offer outsized returns compared to traditional investment strategies.
The stocks discussed below were picked from Ark Invest’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1,009 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Shopify Inc. (SHOP): Among Top Stocks to Buy from Ark Invest’s Portfolio
An enthusiastic customer completing a purchase and receiving an order confirmation via one of the companies online sales channels.
Number of Hedge Fund Holders as of Q4: 64
Ark Invest’s Equity Stake: $479.02 Million
Shopify Inc. (NYSE:SHOP) delivered stronger-than-expected revenue for the fourth quarter, though it fell short on earnings. The popular e-commerce platform reported adjusted earnings per share of $0.39, missing analysts’ expectations of $0.43. However, revenue exceeded forecasts, reaching $2.81 billion compared to the anticipated $2.73 billion. This marked a significant 31% increase from the $2.14 billion reported in the same quarter of the previous year, reflecting Shopify’s continued growth and strong merchant activity.
Despite the earnings miss, Shopify Inc. (NYSE:SHOP) remains optimistic about its trajectory. The company noted that the strong merchant momentum seen in Q4 is expected to carry into the first quarter, though it acknowledged that Q1 is traditionally its lowest quarter in terms of gross merchandise volume. This outlook signals confidence in Shopify’s ability to sustain growth, driven by its expanding ecosystem and increasing adoption of its commerce solutions.
Shopify Inc. (NYSE:SHOP)’s earnings report comes amid ongoing adjustments in the e-commerce industry following former President Donald Trump’s recent tariffs on the nation’s top three trading partners and his decision to close the long-standing de minimis trade loophole, commonly used by Chinese online retailers. The abrupt change disrupted customs processes and U.S. Postal Service operations, prompting Trump to sign an executive order temporarily reinstating the rule. On an investor call, Shopify President Harley Finkelstein emphasized the importance of the de minimis exception for small businesses, stating that it helps lower shipping costs and enables them to compete on a larger scale. He also advocated for broader reforms to the rule to ensure continued support for global commerce.
RiverPark Large Growth Fund stated the following regarding Shopify Inc. (NYSE:SHOP) in its Q4 2024 investor letter:
“Shopify Inc. (NYSE:SHOP): Shopify was a top contributor in the fourth quarter following a strong 3Q earnings report that included better than expected revenue growth and continued margin expansion. GMV growth of 24% was three percentage points above investor estimates, revenue of $2.2 billion was $40 million better and free cash flow of $421 million was $80 million better. A combination of new merchants to the company’s platform, increased adoption of SHOP’s offerings by existing merchants, and e-commerce market share gains are driving this revenue growth and profitability.
Overall, SHOP ranks 7th on our list of top stocks to buy from Ark Invest’s portfolio. While we acknowledge the potential for SHOP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SHOP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
