Could the ownership structure of Embark Technology, Inc. (NASDAQ:EMBK) tell us anything useful?


A look at the shareholders of Embark Technology, Inc. (NASDAQ: EMBK) can tell us which group is more powerful. Generally speaking, as a company grows, institutions increase their ownership. Conversely, insiders often decrease their ownership over time. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, “Don’t tell me what you think, tell me what you have in your wallet”.

Embark Technology is a small company with a market capitalization of US$492 million, so it may still fly under the radar of many institutional investors. Looking at our ownership group data (below), it appears that institutional investors have bought the company. Let’s dig deeper into each owner type to learn more about Embark Technology.

NasdaqGM: EMBK Ownership Breakdown August 13, 2022

What does institutional ownership tell us about Embark technology?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.

As you can see, institutional investors have a sizeable stake in Embark Technology. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. So it’s worth checking out Embark Technology’s earnings history below. Of course, the future is what really matters.

NasdaqGM: EMBK Earnings and Revenue Growth August 13, 2022

Embark Technology is not a hedge fund. Data Collective is currently the largest shareholder, with 14% of the outstanding shares. In comparison, the second and third shareholders hold around 12% and 11% of the shares. Alex Rodrigues, who is the third shareholder, also holds the title of member of the board of directors.

We also observed that the top 6 shareholders represent more than half of the share register, with some small shareholders to balance the interests of the larger ones to some extent.

Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. There are plenty of analysts covering the stock, so it might be interesting to see what they are predicting as well.

Insider Ownership of Embark Technology

The definition of an insider may differ slightly from country to country, but board members still matter. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.

Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of Embark Technology, Inc. Insiders own a $97 million stake in this $492 million company. We would say this shows alignment with shareholders, but it should be noted that the company is still quite small; some insiders may have founded the company. You can click here to see if these insiders have been buying or selling.

General public property

With a 41% stake, the general public, consisting mostly of individual investors, has some influence over Embark Technology. This size of ownership, although considerable, may not be enough to change company policy if the decision is not in line with other major shareholders.

Private Equity Ownership

The private equity firms hold a 25% stake in Embark Technology. This suggests that they can influence key policy decisions. Some investors might be encouraged by this, as private equity is sometimes able to encourage strategies that help the market see the value of the company. Alternatively, these holders could exit the investment after making it public.

Next steps:

I find it very interesting to see who exactly owns a company. But to really get insight, we also need to consider other information. Be aware that Embark Technology watch 4 warning signs in our investment analysis and 3 of them are potentially serious…

If you prefer to find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month the financial statements are dated. This may not be consistent with the annual report figures for the full year.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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