Institutional investors are Robinhood Markets, Inc.'s (NASDAQ:HOOD) biggest bettors and were rewarded after last week's US$343m market cap gain (2024)

Key Insights

• Institutions' substantial holdings in Robinhood Markets implies that they have significant influence over the company's share price
• 53% of the business is held by the top 8 shareholders
• Insider ownership in Robinhood Markets is 21%

To get a sense of who is truly in control of Robinhood Markets, Inc. (NASDAQ:HOOD), it is important to understand the ownership structure of the business. With 39% 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.

Last week’s 4.2% gain means that institutional investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. One-year return to shareholders is currently 17% and last week’s gain was the icing on the cake.

Let's delve deeper into each type of owner of Robinhood Markets, beginning with the chart below.

Check out our latest analysis for 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 implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Robinhood Markets' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Robinhood Markets. The company's largest shareholder is Index Ventures SA, with ownership of 8.3%. With 7.5% and 6.8% of the shares outstanding respectively, Baiju Bhatt and Vladimir Tenev are the second and third largest shareholders. Note that the second and third-largest shareholders are also Top Key Executive and Chairman of the Board, respectively, meaning that the company's top shareholders are insiders.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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.

Insider Ownership Of Robinhood Markets

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circ*mstances.

Our most recent data indicates that insiders own a reasonable proportion of Robinhood Markets, Inc.. It has a market capitalization of just US$8.5b, and insiders have US$1.8b 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

The general public-- including retail investors -- own 14% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With an ownership of 20%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

Our data indicates that Private Companies hold 6.2%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

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. For example, we've discovered 2 warning signs for Robinhood Markets that you should be aware of before investing here.

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.