Cathie Wood's Dip Switch Strategy: Two Beaten-Down Gems Ready to Recover

When the market’s most celebrated investors spot opportunities amid turmoil, savvy investors often take note. Cathie Wood, CEO of Ark Invest, has built her reputation on identifying companies with transformative potential—and right now, two names that faced significant selling pressure in mid-2025 could represent compelling dip-buying opportunities. The framework here is simple: market downturns can create openings for disciplined accumulation in fundamentally sound businesses. Spotify Technology (NYSE: SPOT) and Pinterest (NYSE: PINS) exemplify this thesis, offering the combination of operational momentum and ecosystem-driven growth that typically appeals to contrarian investors.

Pinterest: User Growth Meeting Monetization Inflection

Pinterest weathered a challenging 2025, as tariff-driven advertising headwinds pressured platform spending. Yet beneath the surface, the fundamentals tell a different story. The company’s monthly active user base expanded to 600 million in the third quarter, marking a 12% year-over-year increase that suggests the platform’s content utility remains sticky and compelling.

More importantly, Pinterest has moved beyond pure user acquisition into a more profitable phase. Average revenue per user (ARPU) continues its upward trajectory across geographies, with particularly robust expansion in international markets. This divergence—steady user growth coupled with accelerating per-user monetization—creates a powerful compound effect. As tariff pressures potentially ease and advertising budgets stabilize, Pinterest’s network effects should strengthen materially. The platform’s deployment of AI-driven recommendation systems mirrors successful strategies employed by larger peers like Meta Platforms, positioning the company to extract additional engagement and value from its audience.

Spotify: Ecosystem Deepening Amid Market Skepticism

Spotify commanded strong momentum through early 2025, but found itself under pressure during the year’s latter half. The departure of its long-time leadership, combined with cautious forward guidance, triggered a wave of portfolio exits. However, the operational narrative remains intact for patient investors.

The streaming leader maintains commanding global market share despite intense competition from technology giants. This dominance reflects the network effects embedded in its business—artist and label partnerships drive subscriber acquisition, which in turn attracts more content creators. Spotify’s strategic pivot toward podcasting deserves particular attention: podcasts reduce exposure to the music royalty expense model, simultaneously boosting engagement metrics and operating margins. The company is targeting one billion monthly active users by 2030, a goal that appears achievable given current trajectory. Beyond user expansion, Spotify sees substantial runway to convert ad-supported listeners into paying subscribers, effectively capturing monetization upside without requiring platform growth. Meanwhile, artificial intelligence initiatives continue enhancing user experience and content discovery, generating engagement that benefits the entire ecosystem.

Why Market Dislocations Create Lasting Value

The common thread binding these opportunities is dip-buying potential rooted in structural advantages rather than temporary sentiment. Both companies operate in expanding ecosystems with moat-like characteristics—network effects that strengthen as scale increases. Spotify’s content partnerships and Pinterest’s user-curation model create competitive advantages that rival platforms struggle to replicate. Simultaneously, monetization pathways remain in early innings: Spotify’s podcast upside and subscriber conversion opportunity, combined with Pinterest’s ARPU expansion trajectory, suggest margin expansion ahead.

Investors with multi-year time horizons who recognize market dips as buying opportunities may find these two names warrant serious consideration. While near-term headwinds have created the dips themselves, the underlying business quality and growth drivers suggest that patient capital could be rewarded handsomely as the market eventually reassesses these names.

Disclosure: The analysis reflects publicly available financial data and industry trends as of February 2026. Past performance does not guarantee future results.