In This Article:
Key Insights
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Institutions' substantial holdings in Shopify implies that they have significant influence over the company's share price
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A total of 25 investors have a majority stake in the company with 49% ownership
To get a sense of who is truly in control of Shopify Inc. (NYSE:SHOP), it is important to understand the ownership structure of the business. With 66% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
No shareholder likes losing money on their investments, especially institutional investors who saw their holdings drop 5.8% in value last week. However, the 42% one-year returns may have helped alleviate their overall losses. We would assume however, that they would be on the lookout for weakness in the future.
Let's take a closer look to see what the different types of shareholders can tell us about Shopify.
See our latest analysis for Shopify
What Does The Institutional Ownership Tell Us About Shopify?
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 Shopify 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. 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 Shopify's earnings history below. Of course, the future is what really matters.
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Shopify. Capital Research and Management Company is currently the largest shareholder, with 9.6% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.2% and 4.9% of the stock. Tobias Lütke, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.
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 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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.