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In this article, I will feature one services sector 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%.

Rocket Fuel (NASDAQ:FUEL) provides artificial-intelligence digital advertising solutions.

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Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldPublic OfferingCurrent OwnershipDecrease In Ownership
John GardnerDirectorFeb 5407,693Yes2,287,515 shares15.1%
Abhinav GuptaVPFeb 5186,855Yes674,812 shares + 360,000 options15.3%
Monte ZwebenDirectorFeb 512,996Yes1,872 shares + 125,870 options9.2%
George JohnCEOFeb 5307,877Yes2,251,924 shares12.0%
Dominic TriggVPFeb 59,115Yes0 shares + 115,885 options7.3%
Richard FrankelPresidentFeb 5254,323Yes2,031,000 shares + 626,344 options8.7%
Peter BardwickCFOFeb 517,500Yes0 shares + 282,500 options5.8%
Ninth MDW Partners10% OwnerJan 301,656,776No9,295,955 shares15.1%

There have been 2,853,135 shares sold by insiders during the last 30 days.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
February 20141,196,3590
January 20141,656,7760
December 201300
November 201300
October 201300
September 2013555,7700

There have been 3,408,905 shares sold, and there have been zero shares purchased by insiders since September 2013.

Financials

Rocket Fuel reported the third-quarter financial results on November 7 with the following highlights:

Revenue$62.5 million
Net loss$6.9 million
Cash$125.3 million
Debt$26.9 million

News

Rocket Fuel reported preliminary full-year 2013 financial results on January 22 with the following highlights:

Revenue$239-$240 million
Net loss$23.8 to $22.1 million

Outlook

Rocket Fuel provided the following guidance on January 22:

Q1/2014FY2014
Revenue$73-$76 million$420-$435 million
Adjusted EBITDA-$9.0 to -$7.5 million$3-$6 million

Competition

Rocket Fuel's competitors include Facebook (NASDAQ:FB), Google (NASDAQ:GOOG), and Yahoo (NASDAQ:YHOO). Here is a table comparing these companies.

CompanyFUELFBGOOGYHOO
Market Cap:1.93B162.03B393.91B39.22B
Employees:5526,33747,756N/A
Qtrly Rev Growth (yoy):1.320.630.17-0.06
Revenue:195.13M7.87B59.82B4.68B
Gross Margin:0.460.780.570.71
EBITDA:-15.05M3.93B17.90B1.21B
Operating Margin:-0.090.370.230.12
Net Income:-24.64M1.49B12.21B1.37B
EPS:-2.720.6138.131.26
P/E:N/A104.0130.7629.97
PEG (5 yr expected):0.601.621.343.30
P/S:9.1520.836.618.26

Rocket Fuel has the lowest gross margin among these four companies.

Here is a table of these competitors' insider-trading activities during the last 30 days.

CompanyInsider buying / sharesInsider selling / shares
FB01,795,865
GOOG0227,639
YHOO011,500

Facebook has also seen intensive insider selling during the last 30 days.

Conclusion

There have been eight different insiders selling Rocket Fuel, and there have not been any insiders buying Rocket Fuel during the last 30 days. Four of these eight insiders decreased their holdings by more than 10%. Rocket Fuel has an insider ownership of 12.30%.

Rocket Fuel has a $42 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $42 price target. I would place a stop loss at $72, which is the all-time high. The three main reasons for the proposed short entry are bearish Point and Figure chart, negative earnings, and the intensive insider-selling activity.

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Source: Rocket Fuel: 8 Different Insiders Have Sold Shares This Year