Yahoo Finance After the recent decline, RLX Technology Inc. (NYSE:RLX) CEO Wang Ying's holdings have lost 8.4% of their value
Every investor in RLX Technology Inc. (NYSE:RLX) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And last week, insiders endured the biggest losses as the stock fell by 8.4%.
In the chart below, we zoom in on the different ownership groups of RLX Technology.
View our latest analysis for RLX Technology
What Does The Institutional Ownership Tell Us About RLX Technology?
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.
RLX Technology already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 RLX Technology, (below). Of course, keep in mind that there are other factors to consider, too.
We note that hedge funds don't have a meaningful investment in RLX Technology. The company's CEO Wang Ying is the largest shareholder with 22% of shares outstanding. For context, the second largest shareholder holds about 13% of the shares outstanding, followed by an ownership of 9.2% by the third-largest shareholder. Interestingly, the third-largest shareholder, Jiang Long is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.
On looking further, we found that 54% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
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 RLX Technology
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.
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 RLX Technology Inc.. Insiders own US$1.8b worth of shares in the US$3.9b company. That's quite meaningful. 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
With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over RLX Technology. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand RLX Technology better, we need to consider many other factors. For instance, we've identified 4 warning signs for RLX Technology (3 shouldn't be ignored) that you should be aware of.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.
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