Otonomo Technologies Ltd.'s (NASDAQ:OTMO) stock price dropped 13% last week; individual investors would not be happy

By
Simply Wall St
Published
November 27, 2021
NasdaqGM:OTMO
Source: Shutterstock

Every investor in Otonomo Technologies Ltd. (NASDAQ:OTMO) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 39% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 13% decline in share price, individual investors suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Otonomo Technologies.

See our latest analysis for Otonomo Technologies

ownership-breakdown
NasdaqGM:OTMO Ownership Breakdown November 28th 2021

What Does The Institutional Ownership Tell Us About Otonomo Technologies?

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.

We can see that Otonomo Technologies 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 Otonomo Technologies' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGM:OTMO Earnings and Revenue Growth November 28th 2021

Otonomo Technologies is not owned by hedge funds. Our data shows that Deer Management Company, LLC is the largest shareholder with 15% of shares outstanding. For context, the second largest shareholder holds about 8.5% of the shares outstanding, followed by an ownership of 7.1% by the third-largest shareholder.

We also observed that the top 8 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Otonomo Technologies

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 some shares in Otonomo Technologies Ltd.. In their own names, insiders own US$37m worth of stock in the US$468m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 39% 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.

Private Equity Ownership

With a stake of 23%, private equity firms could influence the Otonomo Technologies board. 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 15%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Otonomo Technologies better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Otonomo Technologies you should be aware of, and 1 of them is significant.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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