Insiders Are Selling Amazon

Nov.19.13 | About: Amazon.com, Inc. (AMZN)

In this article, I will feature one online retailer 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%.

Amazon.com (NASDAQ:AMZN) operates as an online retailer in North America and internationally.

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Insider selling during the last 30 days

Here is a table of Amazon'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
Diego Piacentini SVP Nov 15 6,779 Yes 187,555 shares 3.5%
Jeffrey Blackburn SVP Nov 1-15 16,041 Yes 121,488 shares 11.7%
Thomas Szkutak CFO Nov 1-15 13,404 Yes

101,350 shares

11.7%
David Zapolsky VP Nov 15 2,228 Yes 13,861 shares 13.8%
Jeffrey Wilke SVP Nov 1-7 17,046 Yes 70,112 shares 19.6%
Jeffrey Bezos CEO Nov 1-5 1,000,000 Yes 84,970,020 shares 1.2%
Tom Alberg Director Nov 1 4,103 Yes 25,908 shares 13.7%
Brian Valentine SVP Nov 1 8,309 Yes 60,524 shares 12.1%
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There have been 1,067,910 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 Amazon's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
November 2013 1,067,910 0
October 2013 0 0
September 2013 5,000 0
August 2013 1,056,878 0
July 2013 0 0
June 2013 2,500 0
May 2013 48,077 0
April 2013 0 0
March 2013 0 0
February 2013 242,781 0
January 2013 0 0
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There have been 2,423,146 shares sold and there have been zero shares purchased by insiders this year. The month of November has seen the most insider selling.

Financials

Amazon reported the third-quarter financial results on October 24 with the following highlights:

Revenue $17.1 billion
Net loss $41 million
Cash $7.7 billion
Debt $3.0 billion
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(Source: Earnings presentation)

Outlook

Amazon's fourth quarter guidance is as follows:

  • Net sales are expected to be between $23.5 billion and $26.5 billion, or to grow between 10% and 25% compared with fourth quarter 2012.
  • Operating income (loss) is expected to be between $(500) million and $500 million, compared to $405 million in fourth quarter 2012.

Competition

Amazon's competitors include Apple (NASDAQ:AAPL), and Barnes & Noble (NYSE:BKS). Here is a table comparing these companies.

Company AMZN AAPL BKS
Market Cap: 168.98B 472.35B 939.28M
Employees: 88,400 80,300 33,850
Qtrly Rev Growth (yoy): 0.24 0.04 -0.09
Revenue: 70.13B 170.91B 6.72B
Gross Margin: 0.27 0.38 0.24
EBITDA: 3.17B 55.76B 20.43M
Operating Margin: 0.01 0.29 -0.03
Net Income: 132.00M 37.04B -223.48M
EPS: 0.28 39.75 -3.83
P/E: 1,337.57 13.21 N/A
PEG (5 yr expected): 14.07 0.85 0.08
P/S: 2.40 2.78 0.14
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Amazon has the second-highest P/S ratio among these three companies.

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

Company Insider buying / shares Insider selling / shares
AAPL 0 240,600
BKS 0 429,760
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Apple has also seen intensive insider selling during the last 30 days.

Conclusion

There have been eight different insiders selling Amazon and there have not been any insiders buying Amazon during the last 30 days. Six of these eight insiders decreased their holdings by more than 10%. Amazon has an insider ownership of 18.70%.

Amazon is trading at a P/E ratio of 1,337.57 and a forward P/E ratio of 138.21. Amazon has a book value of $19.88 per share.

Before entering short Amazon, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are 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.