Institutional investors must be pleased after a 3.8% gain last week that adds to Amplitude, Inc.'s (NASDAQ:AMPL) one-year returns

Key Insights

• Institutions' substantial holdings in Amplitude implies that they have significant influence over the company's share price
• 52% of the business is held by the top 9 shareholders
• Insider ownership in Amplitude is 17%

To get a sense of who is truly in control of Amplitude, Inc. (NASDAQ:AMPL), it is important to understand the ownership structure of the business. We can see that institutions own the lion's share in the company with 45% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And things are looking up for institutional investors after the company gained US$51m in market cap last week. One-year return to shareholders is currently 0.6% and last week’s gain was the icing on the cake.

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

See 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.

As you can see, institutional investors have a fair amount of stake in Amplitude. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Amplitude, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Amplitude. Looking at our data, we can see that the largest shareholder is Sequoia Capital Operations LLC with 8.5% of shares outstanding. In comparison, the second and third largest shareholders hold about 7.4% and 6.5% of the stock. Additionally, the company's CEO Spenser Skates directly holds 5.3% of the total shares outstanding.

On further inspection, we found that more than half the company's shares are owned by the top 9 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Amplitude

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.

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$1.4b, and insiders have US$232m worth of shares in their own names. That's quite significant. 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

The general public-- including retail investors -- own 21% stake in the company, and hence can't easily be ignored. 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 16%, private equity firms could influence the Amplitude board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 2 warning signs for Amplitude 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.

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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.