Yahoo Finance Institutions along with retail investors who hold considerable shares inJD.com, Inc. (NASDAQ:JD) come under pressure; lose 8.4% of holdings value
Key Insights
The considerable ownership by retail investors in JD.com indicates that they collectively have a greater say in management and business strategy
42% of the business is held by the top 25 shareholders
Every investor in JD.com, Inc. (NASDAQ:JD) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 40% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
While institutions, who own 39% shares weren’t spared from last week’s US$3.7b market cap drop, retail investors as a group suffered the maximum losses
In the chart below, we zoom in on the different ownership groups of JD.com.
View our latest analysis for JD.com
What Does The Institutional Ownership Tell Us About JD.com?
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.
JD.com already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 JD.com's earnings history below. Of course, the future is what really matters.
JD.com is not owned by hedge funds. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In JD.com's case, its Top Key Executive, Qiangdong Liu, is the largest shareholder, holding 11% of shares outstanding. With 9.4% and 3.1% of the shares outstanding respectively, Walmart Inc. and BlackRock, Inc. are the second and third largest shareholders.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of JD.com
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.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our information suggests that insiders maintain a significant holding in JD.com, Inc.. It is very interesting to see that insiders have a meaningful US$4.5b stake in this US$42b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 40% stake in the company, and hence can't easily be ignored. 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.
Public Company Ownership
We can see that public companies hold 9.4% of the JD.com shares on issue. 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:
It's always worth thinking about the different groups who own shares in a company. But to understand JD.com better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for JD.com you should know about.
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.
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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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
