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In this article, I will feature one tech stock that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

LinkedIn Corporation (NYSE:LNKD) operates an online professional network.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of LinkedIn's insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Deep NisharSVPOct 7-Nov 546,557Yes81,990 shares36.2%
David HenkeSVPOct 7-Nov 535,416Yes24,063 shares59.5%
David SzeDirectorOct 15-Nov 112,500Yes185,688 shares6.3%
Erika RottenbergVPOct 9-238,000Yes63,454 shares + 27,725 options8.1%
Jeff WeinerCEOOct 7-Nov 5111,000Yes181,835 shares + 1,212,911 options7.4%
Reid HoffmanDirectorOct 7-Nov 5250,002Yes15,906,561 shares1.5%
Michael GamsonSVPOct 158,747Yes132,789 shares + 145,495 options3.0%
James ScottSVPOct 86,250Yes36,182 shares + 100,000 options4.4%
Steve SordelloCFOOct 95,000Yes58,424 shares + 5,000 options7.3%

There have been 483,472 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of LinkedIn's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
November 2013179,3910
October 2013310,3310
September 2013316,8920
August 2013351,8040
July 2013333,7050
June 2013361,2680
May 2013400,5930
April 2013347,7060
March 2013398,0770
February 2013474,0200
January 2013427,6250

There have been 3,901,412 shares sold and there have been zero shares purchased by insiders this year.

Financials

LinkedIn reported the third-quarter financial results on October 29 with the following highlights:

Revenue$393.0 million
Net loss$3.4 million
Cash$2.3 billion

(click to enlarge)

(Source: Earnings presentation)

Outlook

LinkedIn's guidance is as follows:

 Q4/2013FY/2013
Revenue$415-$420 million~$1.5 billion
Adjusted EBITDA$98-$100 million~$364 million

(click to enlarge)

(Source: Earnings presentation)

Competition

LinkedIn's competitors include Facebook (NASDAQ:FB) and Monster Worldwide (NYSE:MWW). Here is a table comparing these companies.

CompanyLNKDFBMWW
Market Cap:26.36B119.36B497.35M
Employees:4,8124,6195,000
Qtrly Rev Growth (yoy):0.560.60-0.11
Revenue:1.38B6.87B844.11M
Gross Margin:0.870.740.55
EBITDA:167.95M3.16B133.30M
Operating Margin:0.050.320.08
Net Income:34.49M1.01B51.06M
EPS:0.220.39-2.33
P/E:994.50125.63N/A
PEG (5 yr expected):2.601.961.49
P/S:19.0317.370.59

LinkedIn has the highest P/S ratio among these three companies.

Here is a table of these competitors' insider-trading activities this year.

CompanyInsider buying / sharesInsider selling / shares
FB012,569,626
MWW00

Only LinkedIn has seen intensive insider selling during the past 30 days.

Conclusion

There have been nine different insiders selling LinkedIn and there have not been any insiders buying LinkedIn during the past 30 days. Two of these nine insiders decreased their holdings by more than 10%.

LinkedIn is trading at a P/E ratio of 994.50 and a forward P/E ratio of 99.45. LinkedIn has a book value of $21.22 per share.

LinkedIn has a $176 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $176 price target. I would place a stop loss at $258, which is the all-time high. The four main reasons for the proposed short entry are high P/S ratio, high P/E ratio, bearish Point and Figure chart, and the intensive insider selling activity.

Source: Insiders Are Selling LinkedIn