Key Insights

• Given the large stake in the stock by institutions, Robinhood Markets' stock price might be vulnerable to their trading decisions
• The top 13 shareholders own 50% of the company
• 15% of Robinhood Markets is held by insiders

A look at the shareholders of Robinhood Markets, Inc. (NASDAQ:HOOD) can tell us which group is most powerful. With 65% stake, institutions possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And things are looking up for institutional investors after the company gained US$1.0b in market cap last week. The one-year return on investment is currently 100% and last week's gain would have been more than welcomed.

Let's take a closer look to see what the different types of shareholders can tell us about Robinhood Markets.

What Does The Institutional Ownership Tell Us About Robinhood Markets?

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.

We can see that Robinhood Markets does have institutional investors; and they hold a good portion of the company's stock. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Robinhood Markets' historic earnings and revenue below, but keep in mind there's always more to the story.

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in Robinhood Markets. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Robinhood Markets' case, its Top Key Executive, Baiju Bhatt, is the largest shareholder, holding 7.4% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.8% and 6.4%, of the shares outstanding, respectively. Interestingly, the third-largest shareholder, Vladimir Tenev is also a Chairman of the Board, again, indicating strong insider ownership amongst the company's top shareholders.

A closer look at our ownership figures suggests that the top 13 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Robinhood Markets

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

It seems insiders own a significant proportion of Robinhood Markets, Inc.. It has a market capitalization of just US$18b, and insiders have US$2.6b worth of shares in their own names. That's quite significant. 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

With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Robinhood Markets. 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.

Next Steps:

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.

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 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.