Cathie Wood Just Bought These 2 Stocks Down 42% and 87%. Should You?

Cathie Wood has made a name for herself as a top growth investor. She has made some bold moves as head of investing company Ark Invest. Although some of Ark's exchange-traded funds (ETFs) have a spotty track record, some of them have outperformed the market, and she has drawn attention to her company's trades, which are reported daily.

Although Wood has a specific, innovation-driven approach to investing, her model is the same "buy low, sell high" model that underpins most successful investing. When stocks she likes go on sale, you're more likely to see them in Ark's shopping cart.

Airbnb (NASDAQ: ABNB) and Roku (NASDAQ: ROKU) are two disruptive, high-opportunity stocks Ark just bought. Should they be in your shopping cart, too?

1. Airbnb stock: 42% off highs

Airbnb is a top brand name in travel, but its stock has been in the doldrums for quite a while. It's a case of skyrocketing too quickly based on market hype, and the stock has never been able to find its ground. Each time it looks compelling, the stock soars before dropping down in the aftermath. With all that volatility, it's only gained 84% since its first-day closing price.

Will things finally start changing for this beleaguered stock? There are a lot of things happening at Airbnb, and the time might be ripe for taking off.

Performance-wise, things have only been so-so. Revenue increased 6% year over year in the 2025 first quarter, which doesn't sound like a growth stock. Airbnb has made the jump from unprofitable growth stock to profitable industry leader, which is when many value investors might jump in if the price is right. Net income was lower in Q1, but the company is generating lots of cash, and trailing 12-month free cash flow is $4.4 billion with a 39% margin.

The question is how much bigger Airbnb can grow. Management is expecting revenue to increase about 10% year over year in the second quarter, which would be a welcome acceleration.

It's keeping a lid on a major launch that it's unveiling next week, but that's going to expand "beyond the core," something it's been talking about for years already. As the platform it is today, investors can expect continued growth from tech enhancements, more hosts, and better features, but these are likely to be incremental. A huge shift in business could boost growth potential, so investors should follow what the company announced on May 13.

At the current price, Airbnb stock trades at a forward, 1-year price-to-earnings (P/E) ratio of 25, and price-to-free cash flow is a strong value at 18. I wouldn't call it bargain territory, but it doesn't look overvalued. If you have a long time horizon, Airbnb stock should eventually find its footing and reward investors, but I wouldn't make it a central position in your portfolio.

Image source: Getty Images.

2. Roku stock: 87% off highs

Roku is in a similar boat. It's a disruptive tech stock and it has become a leader in ad-supported streaming, but the market has expected a lot from it, and it hasn't yet lived up to the hype. Its stock has taken quite a beating, and there's still no expected end to its struggles within the next few months.

Roku is still reporting robust growth. Revenue increased 16% year over year in Q1 2025, driven by both the platform and device segments. Platform revenue is mostly ad revenue for its free channels, and it accounts for the bulk of the total -- 86% in the quarter. Device revenue is its streaming devices, which it continues to lose money on but which provide the gateway for new members to join and stream on its platform. Device gross loss was $19 million in the quarter.

Total operating loss was $58 million, better than $72 million last year, and management is expecting a narrowed net loss of $30 million for the full year, down from $129 million last year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and free cash flow were both positive in the first quarter.

There are many positive things happening at Roku, but the market is tired of waiting for profits. Streaming hours increased by 5.1 million year over year to more than 34 million in Q1, and the Roku Channel moved into the No. 2 slot for most popular channels in the U.S. Roku Channel streaming hours increased 84% year over year in Q1, and the company is using its "home screen" experience to bring people to the channel. 85% of streaming hours on the Roku Channel came from a home screen feature.

Management says the business is on track to achieve operating profits next year, and Wall Street is expecting positive earnings per share (EPS) in 2026, so if you have confidence in Roku stock, things might turn around fairly soon.

At the current price, Roku stock trades at a price-to-sales ratio of 2, which seems fairly priced, if not quite cheap. If you can wait until things turn around, Roku could end up being a great investment. But again, I would only take a small position unless you have a high appetite for risk.

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Jennifer Saibil has positions in Airbnb. The Motley Fool has positions in and recommends Airbnb and Roku. The Motley Fool has a disclosure policy.