Kuaishou Technology's (HKG:1024) stock price dropped 10.0% last week; individual investors would not be happy

By
Simply Wall St
Published
May 09, 2022
SEHK:1024
Source: Shutterstock

Every investor in Kuaishou Technology (HKG:1024) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 36% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 10.0% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 24% stock also took a hit.

Let's take a closer look to see what the different types of shareholders can tell us about Kuaishou Technology.

View our latest analysis for Kuaishou Technology

ownership-breakdown
SEHK:1024 Ownership Breakdown May 9th 2022

What Does The Institutional Ownership Tell Us About Kuaishou 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.

Kuaishou 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. 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 Kuaishou Technology's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
SEHK:1024 Earnings and Revenue Growth May 9th 2022

Kuaishou Technology is not owned by hedge funds. From our data, we infer that the largest shareholder is Hua Su (who also holds the title of Top Key Executive) with 11% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. With 9.0% and 1.9% of the shares outstanding respectively, Yixiao Cheng and Xin Yin are the second and third largest shareholders. Interestingly, the second-largest shareholder, Yixiao Cheng is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 Kuaishou Technology

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 most recent data indicates that insiders own a reasonable proportion of Kuaishou Technology. It has a market capitalization of just HK$256b, and insiders have HK$62b worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 36% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Kuaishou Technology. 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.

Private Equity Ownership

With an ownership of 13%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Public Company Ownership

Public companies currently own 17% of Kuaishou Technology stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Kuaishou Technology has 2 warning signs we think 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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