Tesla insiders sold shares, hinting
Over the past year, many Tesla, Inc. (NASDAQ:TSLA) insiders sold a significant stake in the company which may have piqued investors’ interest. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At Tesla
Over the last year, we can see that the biggest insider sale was by the Technoking of Tesla, Elon Musk, for US$3.9b worth of shares, at about US$220 per share. That means that even when the share price was below the current price of US$263, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. It is worth noting that this sale was only 4.2% of Elon Musk’s holding.
In the last year Tesla insiders didn’t buy any company stock. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Insiders At Tesla Have Sold Stock Recently
Over the last three months, we’ve seen a bit of insider selling at Tesla. CFO, Corporate Controller & Chief Accounting Officer Vaibhav Taneja sold just US$44k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the amount sold isn’t enough for us to put any weight on it.
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Tesla insiders own about US$121b worth of shares (which is 14% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Tesla Insiders?
Our data shows a little more insider selling, but no insider buying, in the last three months. But given the selling was modest, we’re not worried. It’s great to see high levels of insider ownership, but looking back over the last year, we don’t gain confidence from the Tesla insiders selling. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. Case in point: We’ve spotted 1 warning sign for Tesla you should be aware of.