DouYu International Holdings Limited's (NASDAQ:DOYU) last week's 53% decline must have disappointed public companies who have a significant stake

Key Insights

• The considerable ownership by public companies in DouYu International Holdings indicates that they collectively have a greater say in management and business strategy
• 55% of the business is held by the top 2 shareholders
• 17% of DouYu International Holdings is held by insiders

To get a sense of who is truly in control of DouYu International Holdings Limited (NASDAQ:DOYU), it is important to understand the ownership structure of the business. With 38% stake, public companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 53% decline in share price, public companies suffered the most losses.

In the chart below, we zoom in on the different ownership groups of DouYu International Holdings.

Check out our latest analysis for DouYu International Holdings

What Does The Institutional Ownership Tell Us About DouYu International 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.

DouYu International Holdings already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 DouYu International Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

DouYu International Holdings is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Tencent Holdings Limited with 38% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 17% and 4.1%, of the shares outstanding, respectively. Shaojie Chen, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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 DouYu International 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.

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 information suggests that insiders maintain a significant holding in DouYu International Holdings Limited. Insiders have a US$48m stake in this US$278m business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 27% stake in DouYu International Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

We can see that public companies hold 38% of the DouYu International Holdings shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand DouYu International Holdings better, we need to consider many other factors. Be aware that DouYu International Holdings is showing 1 warning sign in our investment analysis , you should know about...

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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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.