If you want to know who really controls Robinhood Markets, Inc. (NASDAQ:HOOD), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 32% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Institutional investors would probably welcome last week's 13% increase in share prices after a year of 74% losses as a sign that returns are likely to begin trending higher.
Let's delve deeper into each type of owner of Robinhood Markets, beginning with the chart below.
What Does The Institutional Ownership Tell Us About Robinhood Markets?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
Robinhood Markets already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Robinhood Markets' earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in Robinhood Markets. The company's largest shareholder is Index Ventures SA, with ownership of 8.7%. In comparison, the second and third largest shareholders hold about 7.7% and 7.1% of the stock. Two of the top three shareholders happen to be Top Key Executive and Chairman of the Board, respectively. That is, insiders feature higher up in the heirarchy of the company's top shareholders.
We also observed that the top 8 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Robinhood Markets
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our information suggests that insiders maintain a significant holding in Robinhood Markets, Inc.. It has a market capitalization of just US$9.5b, and insiders have US$1.4b worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
With a 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Robinhood Markets. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Equity Ownership
With an ownership of 21%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
Private Company Ownership
It seems that Private Companies own 6.4%, of the Robinhood Markets stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - Robinhood Markets has 3 warning signs we think you should be aware of.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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