The recent drop in prices must have disappointed Cricut, Inc. (NASDAQ:CRCT) institutional investors who own 68% of the shares

By
Simply Wall St
Published
January 16, 2022
NasdaqGS:CRCT
Source: Shutterstock

If you want to know who really controls Cricut, Inc. (NASDAQ:CRCT), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 68% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Unfortunately, institutional ended up on the other end of the spectrum as market cap fell by US$211m.

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

View our latest analysis for Cricut

ownership-breakdown
NasdaqGS:CRCT Ownership Breakdown January 16th 2022

What Does The Institutional Ownership Tell Us About Cricut?

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 Cricut 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. 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 Cricut, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGS:CRCT Earnings and Revenue Growth January 16th 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Cricut. The company's largest shareholder is Petrus Trust Company, LTA, with ownership of 58%. This implies that they have majority interest control of the future of the company. In comparison, the second and third largest shareholders hold about 13% and 5.0% of the stock. Ashish Arora, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Cricut

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 circumstances.

Our most recent data indicates that insiders own a reasonable proportion of Cricut, Inc.. Insiders own US$1.0b worth of shares in the US$5.0b 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 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Cricut. 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 Cricut better, we need to consider many other factors. Be aware that Cricut is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

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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