Stock Analysis

Digital Turbine (NASDAQ:APPS) may gain more Institutional Support After Inclusion in S&P MidCap 400 Index

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Shares of Digital Turbine, Inc. ( NASDAQ:APPS ) are trading higher after news broke that the stock is going to be added to the S&P MidCap 400 Index. In pre-market trading, the stock has traded as much as 9% higher than Monday’s closing price.

Digital Turbine is one of two companies being added to the index , the other being Performance Food Group Co. (NYSE: PFGC) . Digital Turbine will be added to the index on 7th September, when Ligand Pharmaceuticals (Nasdaq: LGND) moves to the S&P SmallCap 600 Index.

Digital Turbine’s stock price has been drifting lower since March when it traded at an all-time high of $94.74. As we pointed out in July, Digital Turbine retains strong financials , but the market seems uncertain of the valuation.

Who owns Digital Turbine?

The inclusion of a stock in a relatively minor index like the S&P MidCap index isn’t necessarily bullish as few funds track this index. However, it is a vote of confidence, and it may put the stock on the radar for more institutional investors.

Typically, institutions own a larger share of large companies, while smaller companies count insiders as major shareholders. Share prices tend to perform well when the percentage of shares owned by large funds and institutions is increasing. 

See our latest analysis for Digital Turbine

NasdaqCM:APPS Ownership Breakdown August 31st 2021
NasdaqCM:APPS Ownership Breakdown August 31st 2021

In Digital Turbine’s case, 52.9% of shares are owned by institutions. This is respectable and quite high. It implies high ownership already, but there is also room for institutions to increase their ownership even further which may support the share price. You can keep track of the percentage of institutions that own shares by referring back to this Ownership Breakdown which is updated regularly.

Institutional ownership can work both ways though. They, too, get it wrong sometimes. 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 Digital Turbine, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth NasdaqCM:APPS Earnings and Revenue Growth August 31st 2021
NasdaqCM:APPS Earnings and Revenue Growth August 31st 2021

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Digital Turbine is not owned by hedge funds. The Vanguard Group, Inc. is currently the largest shareholder, with 8.3% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.0% and 5.9%, of the shares outstanding, respectively. Furthermore, CEO William Stone is the owner of 1.1% of the company's shares.

On studying our ownership data, we found that 25 of the top individual shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 understanding of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Digital Turbine (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Digital Turbine is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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Simply Wall St analyst Richard Bowman and Simply Wall St have no position in any of the companies mentioned. This article 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.

Richard Bowman

Richard Bowman

Richard is an analyst, writer and investor based in Cape Town, South Africa. He has written for several online investment publications and continues to do so. Richard is fascinated by economics, financial markets and behavioral finance. He is also passionate about tools and content that make investing accessible to everyone.

About NasdaqCM:APPS

Digital Turbine

Digital Turbine, Inc., through its subsidiaries, operates a mobile growth platform for advertisers, publishers, carriers, and device original equipment manufacturers (OEMs).

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Future Growth5
Past Performance1
Financial Health3

Read more about these checks in the individual report sections or in our analysis model.

Undervalued with high growth potential.