Stock Analysis

MoneyLion Inc.'s (NYSE:ML) last week's 18% decline must have disappointed individual investors who have a significant stake

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A look at the shareholders of MoneyLion Inc. (NYSE:ML) can tell us which group is most powerful. The group holding the most number of shares in the company, around 33% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 18% decline in share price, individual investors suffered the most losses.

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

See our latest analysis for MoneyLion

NYSE:ML Ownership Breakdown February 10th 2023

What Does The Institutional Ownership Tell Us About MoneyLion?

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.

MoneyLion 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. 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 MoneyLion's historic earnings and revenue below, but keep in mind there's always more to the story.

NYSE:ML Earnings and Revenue Growth February 10th 2023

We note that hedge funds don't have a meaningful investment in MoneyLion. Looking at our data, we can see that the largest shareholder is Edison Partners L.P. with 13% of shares outstanding. The second and third largest shareholders are Rohit D'Souza and StepStone Group Inc., with an equal amount of shares to their name at 9.7%. Furthermore, CEO Diwakar Choubey is the owner of 7.1% of the company's shares.

We did some more digging and found that 7 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 MoneyLion

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 MoneyLion Inc.. Insiders have a US$33m stake in this US$185m business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 33% ownership, the general public, mostly comprising of individual investors, have some degree of sway over MoneyLion. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With a stake of 30%, private equity firms could influence the MoneyLion board. 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with MoneyLion (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

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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