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Cathie Wood-led ARKK, or the ARK Innovation ETF, hasn’t had the best of starts to 2024. A fund that charted gains of almost 68% in 2023 is down 4.10% year-to-date, owing to the weakness exhibited by the top players — Coinbase Global Inc., Tesla Inc., and more.
Trading.biz analyst Rahul Nambiampurath believes that Roblox (RBLX), one of ARKK’s components, could lead to a change in fate for this ETF giant in 2024.
“The company has been working extensively towards building a metaverse version coupled with a 3D space for letting users play games and socialize,” mentions Rahul.
How did Roblox perform?
The California-based firm reported a lesser loss — 52 cents per share on bookings worth $1.13 billion, beating market predictions of a 55-cent per share loss on bookings worth $1.05 billion.
The revenue growth reached close to $750 million, with the DAU or the Daily Active Users standing at 71.5 million as of Q4, 2023.
The positive news meant that as of February 8, 2024, RBLX is up 14.94%, week-on-week. Roblox enjoys a weightage of 4.30% in ARKK’s portfolio, and the metaverse angle might just give the ETF the additional legs to make an impression, even in 2024.
Why is the market betting in favor of Roblox?
Besides the news-based surge in prices, there are other reasons why Roblox looks good in 2024, either as a standalone pick or a portfolio component.
Firstly, Roblox expects to generate bookings close to $925 million in Q1 2024, higher than the Wall Street Estimates of $903 million. For 2024, the company has its eyes set on cumulative bookings worth $4.21 billion.
If we pull out Roblox’s daily chart, we can see the price breaking out of the ascending triangle pattern. If the high trading volume levels persist and RBLX breaches the $47.70 mark, a quick short-term target could be $51.50.
However, we can expect a quick pullback based on how the relative strength index (RSI) indicator has been moving, with $42.73 being the support level to watch out for.
What other themes could be good for ARKK?
In 2024, Healthcare will work in favour of ARKK. And even though Tesla, Inc. (TSLA) is down 23.15% in 2024, the tech space can see some growth in days or months, especially if the Feds keep delaying the rate cuts. Here are the stocks to keep an eye on in 2024 from ARKK’s perspective:
- CRISPR Therapeutics (CRSP): Healthcare
- Teladoc Health, Inc. (TDOC): Healthcare
- Unity Software Inc. (U): Tech
- Roku, Inc. (ROKU): Tech
Among the mentioned names, ROKU has the highest ARKK weightage at 7.85%, followed by CRSP at 5.18%, U at 3.51%, and TDOC at 3.01, per captured on February 6, 2024.
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