Why Cathie Wood's Stock Picks Still Shine Despite 2025 Selloffs

The investment world watches closely when Cathie Wood makes her moves. As the CEO of ARK Invest, an investment firm known for backing companies with transformative market potential, Wood’s stock selections often generate considerable debate. Critics point to periods where some of her actively managed funds underperformed, yet her conviction picks continue attracting serious consideration from growth-focused investors. Two recent casualties in her portfolio—Spotify and Pinterest—deserve a closer look for patient long-term investors.

Spotify: Beneath the Surface Turbulence

Spotify Technology started 2025 with momentum but faced significant headwinds through the latter half of the year. The departure of longtime CEO Daniel Ek along with weaker-than-expected guidance sent many investors scrambling for exits. Yet the music streaming leader still presents compelling fundamentals that suggest recovery remains likely.

The competitive landscape remains challenging, with tech giants constantly challenging its dominance. Nevertheless, Spotify has solidified its position as the global market leader, holding commanding market share in music streaming. This leadership stems partly from network effects—as the platform attracts major label deals and artist partnerships, more listeners arrive, making the platform more valuable to content creators. This virtuous cycle creates a moat difficult for competitors to breach.

The Podcast Strategy Reshaping Streaming Economics

What sets Spotify apart from pure music rivals is its strategic pivot into podcasts. This expansion isn’t merely diversification; it’s fundamentally reshaping unit economics. Unlike music, where royalty payments consume significant margins, podcasts enable higher profitability while deepening user engagement. The company envisions reaching one billion monthly active users by 2030—an ambitious target that’s increasingly achievable given current growth trajectories.

The pathway to this goal involves two key levers: geographic expansion into undermonetized regions and conversion of its massive ad-supported base into paying subscribers. With AI-driven personalization initiatives continuing to improve content recommendations and user session time, the platform has multiple avenues for sustainable growth. After six months of weakness, these structural tailwinds suggest the stock warrants serious consideration.

Pinterest: The Monetization Engine Quietly Strengthening

Pinterest faced its own 2025 headwinds, with financial results disappointing amid tariff-driven advertising softness. The narrative, however, tells an incomplete story about the platform’s underlying momentum.

Monthly active users jumped 12% year-over-year to 600 million in Q3—solid growth that expands the advertising audience. More importantly, the company is efficiently converting that growing user base into revenue. Average revenue per user (ARPU) continues climbing, particularly in international markets where growth rates significantly outpace developed regions.

International ARPU: Where Growth is Actually Accelerating

This geographic monetization gap represents Pinterest’s hidden opportunity. As the company extends its advertising infrastructure and brand presence in emerging markets, ARPU growth will likely accelerate beyond current levels. Combined with organic user acquisition, this two-factor growth model creates the conditions for substantial margin expansion.

Additionally, Pinterest is deploying AI technologies to boost engagement metrics, a playbook proven effective by Meta Platforms and other social platforms. Near-term macro challenges may persist, but the foundation for multi-year outperformance looks increasingly solid.

The Cathie Wood Thesis on Disruptive Growth

Cathie Wood built her reputation identifying companies riding long-term structural trends before mainstream recognition. Both Spotify and Pinterest fit this pattern—not pure speculation, but companies with expanding ecosystems, strengthening network effects, and nascent monetization tailwinds just beginning to accelerate.

Yes, both stocks tumbled in 2025. Yes, near-term uncertainty remains. But that’s precisely when the most compelling long-term opportunities emerge for investors with appropriate time horizons. For those prepared to hold positions through volatility, these dips may represent the kind of entry points that separate long-term wealth builders from short-term traders.