The big shareholder groups in iQIYI, Inc. (NASDAQ:IQ) have power over the company.
Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies.
Companies that have been privatized tend to have low insider ownership.
iQIYI has a market capitalization of US$14b, so it’s too big to fly under the radar. We’d expect to see both institutions and retail investors owning a portion of the company.
Our analysis of the ownership of the company, below, shows that
institutions are noticeable on the share registry.
We can zoom in on the different ownership groups, to learn more about IQ.
What Does The Institutional Ownership Tell Us About iQIYI?
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.
iQIYI already has institutions on the share registry. Indeed, they own 14% of 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.
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 iQIYI, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don’t have many shares in iQIYI.
Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of iQIYI
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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our most recent data indicates that insiders own less than 1% of iQIYI, Inc..
It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amount to less than 1%, we can see that board members collectively own US$38m worth of shares (at current prices).
In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.
General Public Ownership
With a 21% ownership, the general public have some degree of sway over IQ.
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 a stake of 6.8%, private equity firms could influence the IQ board.
Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Public Company Ownership
We can see that public companies hold 58%, of the IQ shares on issue.
It’s hard to say for sure, but this suggests they have entwined business interests. This might be a strategic stake, so it’s worth watching this space for changes in ownership.
It’s always worth thinking about the different groups who own shares in a company. But to understand iQIYI better, we need to consider many other factors.
I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at [email protected].
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