Butterfly Network, Inc.'s (NYSE:BFLY) 21% loss last week hit both individual investors who own 48% as well as institutions

Key Insights

• Significant control over Butterfly Network by retail investors implies that the general public has more power to influence management and governance-related decisions
• 48% of the business is held by the top 25 shareholders
• Insiders have been buying lately

To get a sense of who is truly in control of Butterfly Network, Inc. (NYSE:BFLY), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 48% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 21% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 26% stock also took a hit.

Let's delve deeper into each type of owner of Butterfly Network, beginning with the chart below.

See our latest analysis for Butterfly Network

What Does The Institutional Ownership Tell Us About Butterfly Network?

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.

Butterfly Network 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 Butterfly Network's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Butterfly Network. From our data, we infer that the largest shareholder is Jonathan Rothberg (who also holds the title of Top Key Executive) with 17% 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. In comparison, the second and third largest shareholders hold about 5.2% and 5.0% of the stock. Additionally, the company's CEO Joseph DeVivo directly holds 0.8% of the total shares outstanding.

Our studies suggest that the top 25 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 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 Butterfly Network

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 information suggests that insiders maintain a significant holding in Butterfly Network, Inc.. It has a market capitalization of just US$327m, and insiders have US$69m worth of shares in their own names. 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 48% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Butterfly Network. 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 Company Ownership

It seems that Private Companies own 5.0%, of the Butterfly Network stock. 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 Butterfly Network better, we need to consider many other factors. For example, we've discovered 3 warning signs for Butterfly Network (1 is a bit concerning!) that you should be aware of before investing here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.