Key Insights
- Given the large stake in the stock by institutions, Coinbase Global’s stock price might be vulnerable to their trading decisions
- The top 24 shareholders own 50% of the company
- Insiders own 21% of Coinbase Global
To get a sense of who is truly in control of Coinbase Global, Inc. (NASDAQ:COIN), 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 41% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Last week’s 6.6% gain means that institutional investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 119%.
Let’s delve deeper into each type of owner of Coinbase Global, beginning with the chart below.
View our latest analysis for Coinbase Global
What Does The Institutional Ownership Tell Us About Coinbase Global?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
As you can see, institutional investors have a fair amount of stake in Coinbase Global. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It’s therefore worth looking at Coinbase Global’s earnings history below. Of course, the future is what really matters.
Hedge funds don’t have many shares in Coinbase Global. With a 16% stake, CEO Brian Armstrong is the largest shareholder. For context, the second largest shareholder holds about 5.8% of the shares outstanding, followed by an ownership of 4.6% by the third-largest shareholder. Interestingly, the third-largest shareholder, Frederick Ehrsam is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company’s top shareholders.
A closer look at our ownership figures suggests that the top 24 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.
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 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 Coinbase Global
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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 information suggests that insiders maintain a significant holding in Coinbase Global, Inc.. It has a market capitalization of just US$23b, and insiders have US$4.9b 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– including retail investors — own 38% stake in the company, and hence can’t easily be ignored. 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.
Next Steps:
It’s always worth thinking about the different groups who own shares in a company. But to understand Coinbase Global better, we need to consider many other factors. Be aware that Coinbase Global is showing 1 warning sign in our investment analysis , you should know about…
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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 Coinbase Global 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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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.
