8x8, Inc. (NASDAQ:EGHT) institutional owners may be pleased with recent gains after 22% loss over the past year

Key Insights

• Significantly high institutional ownership implies 8x8's stock price is sensitive to their trading actions
• 50% of the business is held by the top 7 shareholders
• Recent sales by insiders

A look at the shareholders of 8x8, Inc. (NASDAQ:EGHT) can tell us which group is most powerful. The group holding the most number of shares in the company, around 73% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

Institutional investors would probably welcome last week's 10% increase in the share price after a year of 22% losses as a sign that returns may to begin trending higher.

Let's take a closer look to see what the different types of shareholders can tell us about 8x8.

Check out our latest analysis for 8x8

What Does The Institutional Ownership Tell Us About 8x8?

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.

8x8 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 8x8's historic earnings and revenue below, but keep in mind there's always more to the story.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Our data indicates that hedge funds own 11% of 8x8. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Sylebra Capital Limited is currently the largest shareholder, with 11% of shares outstanding. In comparison, the second and third largest shareholders hold about 9.9% and 9.0% of the stock. Furthermore, CEO Samuel Wilson is the owner of 1.0% of the company's shares.

We did some more digging and found that 7 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of 8x8

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.

We can report that insiders do own shares in 8x8, Inc.. It has a market capitalization of just US$371m, and insiders have US$9.0m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 14% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand 8x8 better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for 8x8 you should know about.

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.