Key Takeaway
When markets sell off, some of the most successful investors see opportunity where others see fear. Cathie Wood, the founder and CEO of Ark Invest, has built her reputation on identifying disruptive innovation and holding through volatility. In early February 2026, Wood made a bold move by purchasing shares of Figma (FIG), Robinhood Markets (HOOD), and Shopify (SHOP) during a significant market pullback. These three high-growth stocks had tumbled between 6% and 9% in a single trading session, extending painful losses for retail investors. Yet Ark Invest used this weakness to expand positions, investing approximately $6.8 million in Figma, $34 million in Robinhood, and an undisclosed amount in Shopify.
The appeal of these investments lies in their dramatic price declines from recent highs. Figma has fallen 84% from its peak, Robinhood has declined 35%, and Shopify has dropped 49%. While such drawdowns might scare away risk-averse investors, Cathie Wood has consistently demonstrated a contrarian approach, believing that short-term market sentiment often disconnects from long-term fundamental value. For investors looking to understand the bull case for these beaten-down growth stocks, this analysis examines each company's business fundamentals, recent financial performance, and the investment thesis that attracted Ark Invest's capital during this market correction.
Understanding Cathie Wood's Investment Philosophy
Cathie Wood founded Ark Investment Management in 2014 with a singular focus on investing in disruptive innovation across five sectors: genomics, automation, fintech, blockchain, and artificial intelligence. Her investment strategy emphasizes concentrated positions in companies that she believes will benefit from technological paradigm shifts, often holding positions through significant volatility. Ark Invest's actively managed exchange-traded funds (ETFs) have attracted billions in assets under management from investors who share Wood's long-term vision and willingness to tolerate short-term drawdowns.
The February 2026 purchases represent a classic example of Wood's contrarian approach. Rather than fleeing from weakness, Ark Invest actively sought out quality growth companies at discounted valuations following negative market reactions to quarterly earnings reports. This strategy assumes that market overreactions to temporary challenges create buying opportunities in companies with strong long-term fundamentals. The key question for investors is whether these three stocks represent genuine value at current levels or if their declines reflect deeper structural challenges that could persist.
Ark Invest's willingness to deploy capital during market downturns contrasts sharply with the behavior of many institutional investors who reduce risk exposure during periods of uncertainty. Wood has consistently argued that waiting for perfect market conditions means missing the best opportunities, as truly disruptive innovations rarely trade at attractive valuations during stable markets. This philosophical approach has produced mixed results over the years, with some investments delivering exceptional returns while others have required patience during extended drawdowns.
Figma: The Design Platform Trading at 18x Revenue
Figma Inc. (NYSE: FIG) went public in the summer of 2025 at $33 per share, initially soaring to $142.92 before a dramatic correction brought the stock to its current levels near $22. The design software company offers an AI-powered collaborative platform that simplifies website, application, and digital product design for teams worldwide. Despite its market-leading position in the design software space, Figma has struggled to maintain the growth rates that justified its initial public offering valuation.
Revenue growth has decelerated significantly since the IPO. The company reported 46% year-over-year growth in Q1 2025, followed by 41% in Q2 2025, and 38% in Q3 2025. Management's guidance for Q4 2025 calls for approximately 35% growth, representing a continued slowing trend. This deceleration has alarmed investors who purchased the stock at premium valuations expecting sustained hypergrowth. However, it's worth noting that even 35% annual growth remains exceptional by traditional software industry standards, and the company continues to expand its customer base and deepen relationships with existing clients.
A more encouraging sign is Figma's net dollar retention rate of 131% for customers generating at least $10,000 in annual spend. This metric indicates that existing large customers are increasing their spending by 31% year-over-year, demonstrating strong product-market fit and expanding use cases within enterprise accounts. The company now serves over 13 million users with 12,910 paid accounts on track to spend at least $10,000 each annually. This enterprise expansion provides a stable revenue base even as new customer acquisition moderates.
From a valuation perspective, Figma now trades at approximately 18x estimated 2025 revenue, a dramatic compression from the 60x revenue valuation at its peak. For a company growing revenue at 35-40% annually with strong enterprise retention metrics, this valuation could represent a significant discount for investors with longer time horizons. The 12-month median price target from analysts stands at $69, representing more than triple the current stock price, suggesting that Wall Street sees substantial upside from current levels.
The risks to the Figma investment thesis include continued deceleration in revenue growth, potential disruption from AI-powered design tools, and the possibility that the design software market is more commoditized than current market leaders assume. Additionally, as a relatively new public company, Figma still faces scrutiny regarding its path to sustained profitability, particularly given its significant investments in product development and international expansion. Investors considering Figma should weigh these risks against the potential rewards of owning a market leader at a fraction of its former valuation.
Robinhood: Building a Financial SuperApp Amid Crypto Winter
Robinhood Markets Inc. (NASDAQ: HOOD) reported its fourth-quarter 2025 results on February 10, 2026, generating mixed reactions from investors. Revenue rose 27% to $1.28 billion, exceeding the company's own guidance but falling short of analyst consensus estimates. The online trading platform faced particular pressure in its cryptocurrency segment, where revenue declined 38% year-over-year as digital asset markets continued recovering from regulatory challenges that emerged in 2025. Despite this weakness, Robinhood's core stock trading business remained resilient, and the company made progress expanding its suite of financial products and services.
Ark Invest's decision to deploy approximately $34 million in Robinhood shares during the post-earnings decline suggests confidence in the platform's long-term trajectory despite near-term headwinds. The investment thesis for Robinhood centers on its potential to evolve from a commission-free trading app into a comprehensive financial superapp offering banking, investing, retirement, and credit products. The company's 18.4 billion margin book and growing subscription revenue through its Gold tier provide diversified revenue streams beyond transaction-based income.
Analysts remain divided on Robinhood's outlook, with 24 covering the stock maintaining a consensus "Buy" rating. The average price target suggests meaningful upside from current levels, though individual analyst estimates vary widely reflecting uncertainty about the company's ability to navigate the evolving fintech landscape. Key catalysts to watch include growth in the predictive markets offerings, expansion of the Robinhood Gold subscriber base, and any recovery in cryptocurrency market activity.
For investors considering following Cathie Wood into Robinhood, the key questions revolve around the durability of its competitive advantages in an increasingly crowded fintech market. Traditional brokers have aggressively copied Robinhood's commission-free model, while emerging competitors offer innovative products targeting younger demographics. Robinhood's brand recognition and user acquisition capabilities remain assets, but sustaining growth will require continuous product innovation and effective execution in new product categories.
The cryptocurrency weakness that pressured fourth-quarter results represents both a risk and potential opportunity. If digital asset markets recover in 2026, Robinhood's crypto revenue could rebound significantly, providing a catalyst for improved financial performance. Conversely, extended crypto market weakness could further pressure results and force the company to rely more heavily on its slower-growing but more stable core business segments.
Shopify: E-Commerce Leader With Strong Q4 Results
Shopify Inc. (NASDAQ: SHOP) delivered impressive fourth-quarter 2025 results that exceeded analyst expectations, yet the market's negative reaction created an opportunity for contrarian buyers like Cathie Wood. Revenue reached $3.7 billion, representing 31% year-over-year growth and marking the company's strongest quarterly growth since 2021. Full-year revenue rose 30%, accelerating from the 26% growth achieved in 2024. The company's Merchant Solutions segment proved particularly strong, soaring 38% to $2.145 billion as merchants expanded their use of Shopify's payment, fulfillment, and marketing tools.
Free cash flow margin reached 19% for the quarter, extending Shopify's streak of double-digit free cash flow margins to ten consecutive quarters. This demonstrates the company's ability to deliver profitable growth while simultaneously investing in new capabilities including artificial intelligence-powered features. Since January 2025, orders coming to Shopify stores from AI search have increased 15x, suggesting significant potential for AI to drive incremental revenue growth.
Thirty-one analysts covering Shopify maintain a consensus "Buy" rating with an average price target of $164.74, representing approximately 39% upside from current levels. Long-term projections suggest the stock could reach $517 by 2050 based on continued market share gains and expansion into new commerce verticals including B2B and offline retail. The analyst community's constructive stance reflects confidence in Shopify's competitive position and growth runway despite the valuation compression affecting technology platforms broadly.
Shopify's investment thesis benefits from several structural advantages. The shift to e-commerce remains a long-term secular trend, and Shopify's platform serves as critical infrastructure for merchants of all sizes. The company's investments in fulfillment network, point-of-sale systems, and AI capabilities position it to capture an increasing share of merchants' total commerce spend. While near-term growth may fluctuate with the macroeconomic environment, the long-term trajectory appears favorable for a company that has consistently gained market share against legacy e-commerce platforms.
The risks to the Shopify investment thesis include increased competition from Amazon's seller services, potential disruption from new commerce platforms, and the possibility that the AI commerce initiatives require more time to generate meaningful revenue impact than optimistic projections assume. Additionally, as a growth-oriented stock, Shopify could face continued valuation pressure if interest rates rise or risk sentiment deteriorates in the broader market.
Is Following Cathie Wood a Good Strategy?
Investors considering following Ark Invest into Figma, Robinhood, and Shopify should understand both the potential rewards and risks of this contrarian approach. Cathie Wood's track record includes several highly successful bets on disruptive innovation, most notably her early and sustained investments in Tesla that generated exceptional returns for Ark funds. However, her investment style also involves significant volatility and the potential for extended drawdowns when market sentiment turns against innovation-focused growth stocks.
The current portfolio represents a diversified basket of high-conviction positions across different growth verticals. Figma offers exposure to the design software and collaborative productivity market, Robinhood provides fintech innovation and potential cryptocurrency upside, and Shopify captures e-commerce infrastructure and AI commerce trends. Each company operates in a distinct market with its own competitive dynamics, reducing portfolio concentration risk while maintaining thematic cohesion around technology-driven business models.
For investors with longer time horizons who believe in the long-term potential of these businesses, current valuations may represent an attractive entry point. The market's negative reactions to quarterly results often create overdone selloffs that disconnect stock prices from underlying business value. However, investors should be prepared for continued volatility and potential further downside if market conditions deteriorate or company-specific challenges emerge.
Investment Considerations and Risk Management
Before following Ark Invest's purchases, investors should conduct their own due diligence and consider their individual risk tolerance, time horizon, and portfolio allocation. These three stocks carry above-average volatility compared to broader market indices, and past performance of Cathie Wood's investments does not guarantee future results. Position sizing should reflect the inherent uncertainty in predicting which growth stocks will ultimately succeed in their respective markets.
For investors seeking to identify similar opportunities, the Intellectia.AI AI Screener provides powerful tools to filter stocks based on custom criteria. Whether looking for growth stocks trading at discounts to historical valuations, companies with strong analyst ratings, or businesses demonstrating improving technical momentum, AI-powered screening can help identify candidates that align with specific investment strategies.
Additionally, the AI Stock Picker feature analyzes market trends and provides data-driven recommendations tailored to individual investment goals. These tools complement traditional fundamental analysis by incorporating natural language processing and machine learning to identify patterns that human analysts might miss. For investors looking to build portfolios around contrarian opportunities like those Ark Invest is pursuing, AI-powered analysis can help validate investment thesis and identify additional opportunities.
Conclusion
Cathie Wood's February 2026 purchases of Figma, Robinhood, and Shopify represent a classic application of contrarian value investing within a growth-oriented framework. The 84%, 35%, and 49% declines from recent highs have brought these stocks to valuations that Wood believes reflect short-term market overreaction rather than fundamental business deterioration. For investors with appropriate risk tolerance and time horizons, these positions may offer attractive risk-reward profiles, though caution remains warranted given the volatile nature of growth stocks during periods of market uncertainty.
The key to evaluating these opportunities lies in assessing each company's long-term competitive position and growth potential against current market expectations. Figma's design platform dominance and enterprise retention metrics suggest the business may be worth more than current valuations imply. Robinhood's potential as a financial superapp could justify a premium if cryptocurrency markets recover and new product initiatives succeed. Shopify's accelerating growth and strong free cash flow generation indicate a business executing well despite share price weakness.
Sign up for Intellectia.AI today to get daily AI stock picks, trading signals and in-depth market analysis to guide your journey from beginner to pro. A great starting point is the Intellectia.AI AI Screener. You can use it to filter growth stocks trading at discounts to historical valuations based on your custom criteria. Furthermore, for those looking for AI-powered stock recommendations, the AI Stock Picker provides data-driven, actionable insights tailored to your investment strategy.
FAQ
Is following Cathie Wood's trades a good idea for individual investors? Following trades by successful investors like Cathie Wood can provide valuable ideas, but investors should conduct independent research and consider their own risk tolerance. Ark Invest's positions represent long-term conviction bets that may experience significant volatility. Individual investors should position appropriately and maintain diversification.
Why did Figma, Robinhood, and Shopify stock fall so dramatically? Figma fell ahead of its quarterly report as growth deceleration concerns mounted. Robinhood declined after reporting mixed Q4 results with cryptocurrency revenue weakness. Shopify slid despite beating estimates, reflecting broader valuation compression affecting technology growth stocks.
What is Figma's growth outlook for 2026? Figma expects approximately 35% revenue growth for full-year 2025, representing continued deceleration from prior years but still strong growth by historical standards. Key metrics to watch include enterprise net dollar retention and new customer acquisition rates.
Does Robinhood have a path to profitability? Robinhood has achieved consistent profitability on a non-GAAP basis and continues to expand its margin book and subscription revenue. The company is investing heavily in new products including predictive markets and banking services that could drive future growth.
What makes Shopify attractive at current valuations? Shopify's accelerating revenue growth, strong free cash flow margins, and leadership in e-commerce infrastructure make it attractive at current levels. The company is well-positioned to benefit from AI commerce trends and expansion into B2B and offline retail markets.
