With 64% ownership in Spotify Technology S.A. (NYSE:SPOT), institutional investors have a lot riding on the business

Key Insights

• Significantly high institutional ownership implies Spotify Technology's stock price is sensitive to their trading actions
• A total of 13 investors have a majority stake in the company with 50% ownership
• Insider ownership in Spotify Technology is 18%

To get a sense of who is truly in control of Spotify Technology S.A. (NYSE:SPOT), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 64% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, institutional investors ended up benefitting the most after the company hit US$101b in market cap. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 152%.

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

See our latest analysis for Spotify Technology

What Does The Institutional Ownership Tell Us About Spotify Technology?

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 Spotify Technology does have institutional investors; and they hold a good portion of the company's stock. 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 Spotify Technology's historic earnings and revenue below, but keep in mind there's always more to the story.

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Spotify Technology is not owned by hedge funds. From our data, we infer that the largest shareholder is Sven Lorentzon (who also holds the title of Top Key Executive) with 11% 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. Tencent Holdings Limited is the second largest shareholder owning 8.2% of common stock, and Baillie Gifford & Co. holds about 7.7% of the company stock. Additionally, the company's CEO Daniel Ek directly holds 6.6% of the total shares outstanding.

After doing some more digging, we found that the top 13 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Spotify Technology

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 Spotify Technology S.A.. It is very interesting to see that insiders have a meaningful US$18b stake in this US$101b business. 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 10% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Spotify Technology. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Public Company Ownership

We can see that public companies hold 8.2% of the Spotify Technology shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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. Take risks for example - Spotify Technology has 2 warning signs we think you should be aware of.

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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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.