After losing 9.0% in the past year, Amplitude, Inc. (NASDAQ:AMPL) institutional owners must be relieved by the recent gain

Key Insights

• Institutions' substantial holdings in Amplitude implies that they have significant influence over the company's share price
• The top 9 shareholders own 54% of the company
• 14% of Amplitude is held by insiders

If you want to know who really controls Amplitude, Inc. (NASDAQ:AMPL), then you'll have to look at the makeup of its share registry. With 52% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Last week's US$63m market cap gain would probably be appreciated by institutional investors, especially after a year of 9.0% losses.

In the chart below, we zoom in on the different ownership groups of Amplitude.

Check out our latest analysis for Amplitude

What Does The Institutional Ownership Tell Us About Amplitude?

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.

Amplitude already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Amplitude's historic earnings and revenue below, but keep in mind there's always more to the story.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Amplitude is not owned by hedge funds. Sequoia Capital Operations LLC is currently the company's largest shareholder with 8.0% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 6.8% of common stock, and T. Rowe Price Group, Inc. holds about 6.5% of the company stock. In addition, we found that Spenser Skates, the CEO has 5.0% of the shares allocated to their name.

We did some more digging and found that 9 of the top shareholders account for roughly 54% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 Amplitude

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 most recent data indicates that insiders own a reasonable proportion of Amplitude, Inc.. It has a market capitalization of just US$1.6b, and insiders have US$224m worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 20% stake in Amplitude. 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.

Private Equity Ownership

With an ownership of 14%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Amplitude better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Amplitude you should be aware of, and 1 of them shouldn't be ignored.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.