Yahoo Finance Institutional investors may adopt severe steps after XPeng Inc.'s (NYSE:XPEV) latest 4.2% drop adds to a year losses
Every investor in XPeng Inc. (NYSE:XPEV) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 33% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).
And institutional investors saw their holdings value drop by 4.2% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 58% might not go down well especially with this category of shareholders. Often called “market makers”, institutions wield significant power in influencing the price dynamics of any stock. As a result, if the downtrend continues, institutions may face pressures to sell XPeng, which might have negative implications on individual investors.
In the chart below, we zoom in on the different ownership groups of XPeng.
Check out our latest analysis for XPeng
What Does The Institutional Ownership Tell Us About XPeng?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
XPeng already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of XPeng, (below). Of course, keep in mind that there are other factors to consider, too.
XPeng is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Xiaopeng He with 20% of shares outstanding. With 11% and 4.0% of the shares outstanding respectively, Alibaba Group Holding Limited and Xizang Qingyu Venture Capital Management Co., Ltd are the second and third largest shareholders.
We also observed that the top 9 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.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 XPeng
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.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own a reasonable proportion of XPeng Inc.. It is very interesting to see that insiders have a meaningful US$3.7b stake in this US$14b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.
General Public Ownership
The general public, who are usually individual investors, hold a 25% stake in XPeng. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Private Company Ownership
Our data indicates that Private Companies hold 4.6%, of the company's shares. 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.
Public Company Ownership
It appears to us that public companies own 11% of XPeng. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand XPeng better, we need to consider many other factors.
Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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