After a year of 0.8% returns, Cricut, Inc.'s (NASDAQ:CRCT) share price drop last week may have less of an impact on institutional investors

editorial-team@simplywallst.com (Simply Wall St)

Fri, Jan 10, 2025, 6:59 AM 4 min read

Every investor in Cricut, Inc. (NASDAQ:CRCT) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 69% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Institutional investors endured the highest losses after the company's market cap fell by US$54m last week. Still, the 0.8% one-year gains may have helped mitigate their overall losses. They should, however, be mindful of further losses in the future.

In the chart below, we zoom in on the different ownership groups of Cricut.

Check out our latest analysis for Cricut

ownership-breakdown — NasdaqGS:CRCT Ownership Breakdown January 10th 2025

What Does The Institutional Ownership Tell Us About Cricut?

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.

As you can see, institutional investors have a fair amount of stake in Cricut. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Cricut, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth — NasdaqGS:CRCT Earnings and Revenue Growth January 10th 2025

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don't have many shares in Cricut. Petrus Trust Company, LTA is currently the company's largest shareholder with 58% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Ashish Arora is the second largest shareholder owning 14% of common stock, and The Vanguard Group, Inc. holds about 2.3% of the company stock. Ashish Arora, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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 Cricut

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 Cricut, Inc.. Insiders own US$217m worth of shares in the US$1.2b company. That's quite meaningful. 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

The general public, who are usually individual investors, hold a 13% stake in Cricut. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Cricut (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

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.