Over the past year, insiders sold US$19m worth of ServiceNow, Inc. (NYSE:NOW) stock at an average price of US$517 per share allowing them to get the most out of their money. The company's market valuation decreased by US$6.5b after the stock price dropped 7.8% over the past week, but insiders were spared from painful losses.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At ServiceNow
Over the last year, we can see that the biggest insider sale was by the Chief Operating Officer, Chirantan Desai, for US$3.3m worth of shares, at about US$479 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$379. So it is hard to draw any strong conclusion from it.
All up, insiders sold more shares in ServiceNow than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
ServiceNow Insiders Are Selling The Stock
The last quarter saw substantial insider selling of ServiceNow shares. In total, insiders sold US$4.8m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Insider Ownership Of ServiceNow
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that ServiceNow insiders own 0.2% of the company, worth about US$185m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At ServiceNow Tell Us?
Insiders sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that ServiceNow is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing ServiceNow. You'd be interested to know, that we found 1 warning sign for ServiceNow and we suggest you have a look.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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