Sonder Holdings Inc.'s (NASDAQ:SOND) market cap surged US$54m last week, individual investors who have a lot riding on the company were rewarded

By
Simply Wall St
Published
April 19, 2022
NasdaqGS:SOND
Source: Shutterstock

To get a sense of who is truly in control of Sonder Holdings Inc. (NASDAQ:SOND), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 54% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, individual investors collectively scored the highest last week as the company hit US$1.0b market cap following a 5.6% gain in the stock.

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

See our latest analysis for Sonder Holdings

ownership-breakdown
NasdaqGS:SOND Ownership Breakdown April 19th 2022

What Does The Institutional Ownership Tell Us About Sonder Holdings?

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.

As you can see, institutional investors have a fair amount of stake in Sonder Holdings. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Sonder Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NasdaqGS:SOND Earnings and Revenue Growth April 19th 2022

Sonder Holdings is not owned by hedge funds. The company's largest shareholder is FMR LLC, with ownership of 9.1%. The second and third largest shareholders are WestCap Management, LLC and Alec Gores, with an equal amount of shares to their name at 8.0%. Additionally, the company's CEO Francis Davidson directly holds 1.6% of the total shares outstanding.

Our studies suggest that the top 23 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 Sonder Holdings

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own some shares in Sonder Holdings Inc.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around US$99m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 54% of Sonder Holdings shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Equity Ownership

With a stake of 22%, private equity firms could influence the Sonder Holdings board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

We can see that Private Companies own 3.8%, of the shares on issue. 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 Sonder Holdings better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Sonder Holdings you should be aware of, and 2 of them are significant.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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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