Advertisement
New Zealand markets closed
  • NZX 50

    11,864.89
    -7.75 (-0.07%)
     
  • NZD/USD

    0.6135
    -0.0036 (-0.58%)
     
  • NZD/EUR

    0.5732
    -0.0009 (-0.15%)
     
  • ALL ORDS

    7,974.80
    -27.70 (-0.35%)
     
  • ASX 200

    7,724.30
    -25.40 (-0.33%)
     
  • OIL

    78.49
    -0.13 (-0.17%)
     
  • GOLD

    2,349.80
    +31.80 (+1.37%)
     
  • NASDAQ

    19,622.43
    +45.50 (+0.23%)
     
  • FTSE

    8,146.86
    -16.81 (-0.21%)
     
  • Dow Jones

    38,513.61
    -133.49 (-0.35%)
     
  • DAX

    18,002.02
    -263.66 (-1.44%)
     
  • Hang Seng

    17,941.78
    -170.85 (-0.94%)
     
  • NIKKEI 225

    38,814.56
    +94.09 (+0.24%)
     
  • NZD/JPY

    96.4760
    -0.3440 (-0.36%)
     

Individual investors who hold 38% of JD.com, Inc. (NASDAQ:JD) gained 13%, institutions profited as well

Key Insights

  • JD.com's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public

  • 44% of the business is held by the top 25 shareholders

  • 12% of JD.com is held by insiders

If you want to know who really controls JD.com, Inc. (NASDAQ:JD), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 38% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 13% increase in the stock price last week, individual investors profited the most, but institutions who own 38% stock also stood to gain from the increase.

ADVERTISEMENT

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

See our latest analysis for JD.com

ownership-breakdown
ownership-breakdown

What Does The Institutional Ownership Tell Us About JD.com?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that JD.com does have institutional investors; and they hold a good portion of the company's stock. 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 JD.com's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
earnings-and-revenue-growth

We note that hedge funds don't have a meaningful investment in JD.com. From our data, we infer that the largest shareholder is Qiangdong Liu (who also holds the title of Top Key Executive) with 12% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. With 9.2% and 3.0% of the shares outstanding respectively, Walmart Inc. and The Vanguard Group, Inc. are the second and third largest shareholders.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. 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 JD.com

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.

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.

Our most recent data indicates that insiders own a reasonable proportion of JD.com, Inc.. It is very interesting to see that insiders have a meaningful US$7.4b stake in this US$59b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over JD.com. 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.

Public Company Ownership

It appears to us that public companies own 12% of JD.com. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand JD.com better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with JD.com .

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here