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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%.

Marketo (MKTO) provides cloud-based marketing software platform that enables organizations to engage in modern relationship marketing in the United States.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Sanjay DholakiaSVPDec 1213,000Yes48,119 shares21.3%
Frederick BallCFODec 1210,000Yes20,000 shares33.3%
William BinchSVPDec 1265,000Yes0 shares + 83,921 options43.6%
Jason HolmesSVPDec 1215,000Yes

50,000 shares + 142,500 options

7.2%
Phillip FernandezCEONov 25-2610,000Yes536,514 shares1.8%

There have been 113,000 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 Marketo's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
December 2013103,0000
November 201310,0000
October 201300
September 20135,271,2400
August 201300
July 201300
June 201300
May 2013126,3000

There have been 5,510,540 shares sold and there have been zero shares purchased by insiders since May 2013. Marketo had its IPO on May 17, 2013 at a price of $13.00 per share.

Financials

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

Revenue$25.5 million
Net loss$10.0 million
Cash$140.9 million
Debt$7.8 million

Outlook

Marketo's guidance is as follows:

Q4/2013FY/2013
Revenue$26.2-$26.7 million$93.9-$94.4 million
GAAP net loss$0.32-$0.34 per share$1.77-$1.81 per share

Competition

Marketo's competitors include Responsys (MKTG). Here is a table comparing these two companies.

CompanyMKTOMKTGIndustry Average (Application Software)
Market Cap:1.22B995.54M919.66M
Employees:3391,084798.00
Qtrly Rev Growth (yoy):0.650.280.31
Revenue:84.59M194.33M158.87M
Gross Margin:0.580.530.71
EBITDA:-36.16M13.34M5.26M
Operating Margin:-0.470.01-0.00
Net Income:-39.90M787.00KN/A
EPS:-2.520.02N/A
P/E:N/A1,217.5027.22
PEG (5 yr expected):-0.805.510.98
P/S:14.245.134.49

Marketo is trading at a higher P/S ratio than Responsys. Responsys has also seen intensive insider selling during the last 30 days.

Conclusion

There have been five different insiders selling Marketo and there have not been any insiders buying Marketo during the last 30 days. Three of these five insiders decreased their holdings by more than 10%. Marketo has an insider ownership of 0.40%.

Before entering short Marketo, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are relatively high P/S ratio, negative earnings, and the intensive insider-selling activity.

Source: Marketo: 5 Different Insiders Have Sold Shares During The Last 30 Days