Netflix: 6 Different Insiders Have Sold Shares During The Last 30 Days

Jun.22.14 | About: Netflix, Inc. (NFLX)

Summary

6 insiders sold Netflix stock within one month.

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

4 of these 6 insiders decreased their holdings by more than 10%.

Netflix (NASDAQ:NFLX) provides Internet television network service that enables subscribers to stream TV shows and movies directly on TVs, computers, and mobile devices in the United States and internationally.

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Insider selling during the last 30 days

Here is a table of Netflix'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
David Hyman GC May 23-June 18 6,801 Yes Yes 5,230
shares + 27,328 options
17.3%
Richard Barton Director May 23-June 18 10,000 Yes Yes 6,343 shares + 40,183 options 17.7%
Ted Sarandos CCO June 18 36,701 Yes Yes 0 shares + 32,574 options 53.0%
Neil Hunt CPO June 2 5,000 Yes Yes 80,786
shares + 129,645 options
2.3%
Ann Mather Director May 27 6,127 Yes Yes 0 shares + 5,789 options 51.4%
Reed Hastings CEO May 27 15,238 Yes Yes 952,215
shares + 1,422,206
options
0.6%
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There have been 79,867 shares sold by insiders during the last 30 days. All these shares were sold 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 Netflix's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
June 2014 50,403 0
May 2014 40,933 0
April 2014 20,238 0
March 2014 5,000 0
February 2014 30,309 0
January 2014 50,436 0
December 2013 22,449 0
November 2013 41,020 0
October 2013 401,947 0
September 2013 30,434 0
August 2013 36,235 0
July 2013 52,426 0
June 2013 15,988 0
May 2013 152,985 0
April 2013 512,814 0
March 2013 750 0
February 2013 1,604 0
January 2013 398,971 0
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There have been 1,864,942 shares sold and there have been zero shares purchased by insiders since January 2013.

Financials

Netflix reported the first-quarter financial results on April 21 with the following highlights:

Revenue $1.3 billion
Net income $53.1 million
Cash $1.7 billion
Debt $0.9 billion
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The six insiders sold their shares after these results.

Outlook

Netflix's second-quarter guidance is as follows:

Total streaming members 49.81 million
Net income $69 million
EPS $1.12
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(Source: Earnings letter)

Competition

Netflix's competitors include Amazon.com (NASDAQ:AMZN). Here is a table comparing these two companies.

Company NFLX AMZN
Market Cap: 26.38B 149.19B
Employees: 2,022 117,300
Qtrly Rev Growth (yoy): 0.24 0.23
Revenue: 4.62B 78.12B
Gross Margin: 0.30 0.28
EBITDA: 342.83M 3.79B
Operating Margin: 0.06 0.01
Net Income: 162.83M 300.00M
EPS: 2.66 0.64
P/E: 165.42 505.77
PEG (5 yr expected): 3.01 7.01
P/S: 5.73 1.93
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Netflix has a higher P/S ratio than Amazon. In Amazon, there have been 1,060,995 shares sold and there have been zero shares purchased by insiders this year. Only Netflix has seen intensive insider selling during the last 30 days.

Conclusion

There have been six different insiders selling Netflix and there have not been any insiders buying Netflix during the last 30 days. Four of these six insiders decreased their holdings by more than 10%. Netflix has an insider ownership of 2.21%.

Before going short Netflix, 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, high P/E ratio, 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.