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:
- The stock was sold by three or more insiders within one month.
- The stock was not purchased by any insiders in the month of intensive selling.
- At least two sellers decreased their holdings by more than 10%.
Facebook (NASDAQ:FB) operates as a social networking company worldwide.
Insider selling during the last 30 days
Here is a table of Facebook's insider-trading activity during the last 30 days by insider.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Marc Andreessen||Director||Nov 6||1,200,000||No||4,565,112 shares||20.8%|
|David Fischer||VP||Nov 6-7||36,000||Yes||481,082 shares||7.0%|
|Colin Stretch||VP||Oct 14-Nov 5||15,718||Yes||
There have been 1,251,718 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 Facebook's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 13,805,626 shares sold and there have been zero shares purchased by insiders this year.
Facebook reported the third-quarter financial results on October 30 with the following highlights:
|Net income [GAAP]||$425 million|
|Net income [Non-GAAP]||$621 million|
|Monthly active users||1.2 billion|
(Source: Earnings presentation)
Facebook has the second-highest P/S ratio among these four companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Google and Microsoft have also seen intensive insider selling during the past 30 days.
There have been three different insiders selling Facebook and there have not been any insiders buying Facebook during the past 30 days. Two of these three insiders decreased their holdings by more than 10%.
Facebook is trading at a P/E ratio of 120.13 and a forward P/E ratio of 42.40. The company has a book value of $5.37 per share.
Before entering short Facebook, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are high P/S ratio, high P/E ratio, and the intensive insider selling activity.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.