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Institutions along with retail investors who hold considerable shares inSolid Power, Inc. (NASDAQ:SLDP) come under pressure; lose 11% of holdings value
Significant control over Solid Power by retail investors implies that the general public has more power to influence management and governance-related decisions
To get a sense of who is truly in control of Solid Power, Inc. (NASDAQ:SLDP), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 52% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).
Following a 11% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 27% stock also took a hit.
In the chart below, we zoom in on the different ownership groups of Solid Power.
What Does The Institutional Ownership Tell Us About Solid Power?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
Solid Power already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Solid Power's historic earnings and revenue below, but keep in mind there's always more to the story.
NasdaqGS:SLDP Earnings and Revenue Growth June 21st 2024
Hedge funds don't have many shares in Solid Power. Our data shows that Ford Motor Company is the largest shareholder with 6.6% of shares outstanding. The second and third largest shareholders are BlackRock, Inc. and Bayerische Motoren Werke Aktiengesellschaft, with an equal amount of shares to their name at 6.0%. Furthermore, CEO John Van Scoter is the owner of 0.8% of the company's shares.
On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Solid Power
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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.
We can report that insiders do own shares in Solid Power, Inc.. It has a market capitalization of just US$282m, and insiders have US$24m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.
General Public Ownership
The general public, who are usually individual investors, hold a substantial 52% stake in Solid Power, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
Public Company Ownership
It appears to us that public companies own 12% of Solid Power. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
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 risks, for instance. Every company has them, and we've spotted 1 warning sign for Solid Power you should know about.
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.
