Golden Matrix Group, Inc.'s (NASDAQ:GMGI) Market Cap Dropped US$197m Last Week; Individual Investors Bore the Brunt

Key Insights

Significant control over Golden Matrix Group by individual investors implies that the general public has more power to influence management and governance-related decisions
A total of 3 investors have a majority stake in the company with 51% ownership
Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

A look at the shareholders of Golden Matrix Group, Inc. (NASDAQ:GMGI) can tell us which group is most powerful. With 14% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Following last week's price drop, Individual investors saw a decline in their holdings value after market cap dropped by US$197m last week. Meanwhile, the low insider ownership hasn't gone unnoticed. Usually, companies that have been privatized tend to have low insider ownership.

In the chart below, we zoom in on the different ownership groups of Golden Matrix Group.

ownership-breakdown — NasdaqCM:GMGI Ownership Breakdown April 14th 2024

What Does The Lack Of Institutional Ownership Tell Us About Golden Matrix Group?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Golden Matrix Group, for yourself, below.

earnings-and-revenue-growth — NasdaqCM:GMGI Earnings and Revenue Growth April 14th 2024

Our data indicates that hedge funds own 6.3% of Golden Matrix Group. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. With a 23% stake, CEO Anthony Goodman is the largest shareholder. For context, the second largest shareholder holds about 20% of the shares outstanding, followed by an ownership of 7.6% by the third-largest shareholder. Interestingly, the third-largest shareholder, Weiting Feng is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 51% stake.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Golden Matrix Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 some shares in Golden Matrix Group, Inc.. In their own names, insiders own US$30m worth of stock in the US$304m company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Golden Matrix Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Golden Matrix Group better, we need to consider many other factors. Take risks for example - Golden Matrix Group has 3 warning signs (and 2 which are a bit unpleasant) we think you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.