Demandware: 4 Different Insiders Have Sold Shares This Month

Jun.20.14 | About: Demandware, Inc. (DWRE)

Summary

4 insiders sold Demandware stock within one month.

The stock was not purchased by any insiders in the month of intensive selling.

3 of these 4 insiders decreased their holdings by more than 10%.

Demandware (NYSE:DWRE) provides cloud-based digital commerce solutions in the United States, Germany, the United Kingdom, and internationally.
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Insider selling during the last 30 days

Here is a table of Demandware's insider activity during the last 30 days.

Name Title Trade Date Shares Sold Option Exercise & Sale Rule 10b5-1 Current Ownership Decrease In Ownership
Charles Kane Director June 19 15,000 Yes Yes 14,391
shares + 12,280 options
36.0%
Lawrence Bohn Director May 29-June 12 900,484 No No 913,232 shares 49.6%
Scott Dussault EVP June 2 17,249 Yes & No Yes 41,141
shares + 87,332 options
11.8%
Jitendra Saxena Director June 2 8,000 No Yes 61,289
shares + 65,472 options
5.9%
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There have been 940,733 shares sold by insiders during the last 30 days. Charles Kane, Scott Dussault, and Jitendra Saxena sold their shares pursuant to a Rule 10b5-1 plan. 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 Demandware's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
June 2014 821,799 0
May 2014 188,966 0
April 2014 33,000 0
March 2014 21,500 0
February 2014 50,000 0
January 2014 0 0
December 2013 0 0
November 2013 766,360 0
October 2013 92,199 0
September 2013 70,458 0
August 2013 105,401 0
July 2013 30,270 0
June 2013 107,948 0
May 2013 860,997 0
April 2013 55,370 0
March 2013 23,708 0
February 2013 164,872 0
January 2013 60,564 0
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There have been 3,453,412 shares sold and there have been zero shares purchased by insiders since January 2013. The month of June has seen the most insider selling this year.

Financials

Demandware reported the first-quarter financial results on May 6 with the following highlights:

Revenue $32.2 million
GAAP net loss $8.8 million
Cash $256.7 million
Debt $2.7 million
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The four insiders sold their shares after these results.

Outlook

Demandware's guidance is as follows:

Q2/2014 FY2014
Revenue $33.5-$34 million $147.5-$148.5 million
GAAP net loss $11.7-$12.2 million $29-$30 million
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Competition

Demandware's competitors include eBay (NASDAQ:EBAY), Digital River (NASDAQ:DRIV), and Oracle (NYSE:ORCL). Here is a table comparing these companies.

Company DWRE EBAY DRIV ORCL
Market Cap: 2.43B 62.21B 460.38M 180.72B
Employees: 383 31,800 1,317 120,000
Qtrly Rev Growth (yoy): 0.57 0.14 -0.12 0.04
Revenue: 115.40M 16.56B 376.46M 37.90B
Gross Margin: 0.74 0.68 0.66 0.82
EBITDA: -17.06M 4.90B 29.79M 16.49B
Operating Margin: -0.19 0.21 -0.02 0.39
Net Income: -21.67M -147.00M -13.56M 11.12B
EPS: -0.68 -0.11 -0.60 2.39
P/E: N/A N/A N/A 16.94
PEG (5 yr expected): -36.75 1.29 3.59 1.33
P/S: 21.19 3.80 1.26 5.00
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Demandware has the highest P/S ratio among these four companies.

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

Company Insider buying / shares Insider selling / shares
EBAY 0 192,071
DRIV 585 0
ORCL 0 6,703,750
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Only Demandware has seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling Demandware, and there have not been any insiders buying Demandware during the last 30 days. Three of these four insiders decreased their holdings by more than 10%. Demandware has an insider ownership of 31.17%.

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

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.