Rocket Fuel: 8 Different Insiders Have Sold Shares This Year

Feb.11.14 | About: Rocket Fuel (FUEL)

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.

Name Title Trade Date Shares Sold Public Offering Current Ownership Decrease In Ownership
John Gardner Director Feb 5 407,693 Yes 2,287,515 shares 15.1%
Abhinav Gupta VP Feb 5 186,855 Yes 674,812 shares + 360,000 options 15.3%
Monte Zweben Director Feb 5 12,996 Yes 1,872 shares + 125,870 options 9.2%
George John CEO Feb 5 307,877 Yes 2,251,924 shares 12.0%
Dominic Trigg VP Feb 5 9,115 Yes 0 shares + 115,885 options 7.3%
Richard Frankel President Feb 5 254,323 Yes 2,031,000 shares + 626,344 options 8.7%
Peter Bardwick CFO Feb 5 17,500 Yes 0 shares + 282,500 options 5.8%
Ninth MDW Partners 10% Owner Jan 30 1,656,776 No 9,295,955 shares 15.1%
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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.

Month Insider selling / shares Insider buying / shares
February 2014 1,196,359 0
January 2014 1,656,776 0
December 2013 0 0
November 2013 0 0
October 2013 0 0
September 2013 555,770 0
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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
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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
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Outlook

Rocket Fuel provided the following guidance on January 22:

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

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

Company FUEL FB GOOG YHOO
Market Cap: 1.93B 162.03B 393.91B 39.22B
Employees: 552 6,337 47,756 N/A
Qtrly Rev Growth (yoy): 1.32 0.63 0.17 -0.06
Revenue: 195.13M 7.87B 59.82B 4.68B
Gross Margin: 0.46 0.78 0.57 0.71
EBITDA: -15.05M 3.93B 17.90B 1.21B
Operating Margin: -0.09 0.37 0.23 0.12
Net Income: -24.64M 1.49B 12.21B 1.37B
EPS: -2.72 0.61 38.13 1.26
P/E: N/A 104.01 30.76 29.97
PEG (5 yr expected): 0.60 1.62 1.34 3.30
P/S: 9.15 20.83 6.61 8.26
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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.

Company Insider buying / shares Insider selling / shares
FB 0 1,795,865
GOOG 0 227,639
YHOO 0 11,500
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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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Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in FUEL over 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.