Facebook is making investors happy with its stock up by over 30% year to date. However, there is one thing that could concern shareholders of the world’s largest social network. Though the stock is doing well, insiders appear to know something that is not known to the majority of shareholders, says a report from CNA Finance.
What insider selling tells
Recently, Facebook insiders have been more active in unloading shares, with two big insider sales recently. Tracking insider sales gives a good idea about expected movements in the stock as insiders know more than an average investor. If insiders make big purchases, then investors can expect something positive down on the road. On the other hand, when insiders offload large quantities of shares, it could be a sign of something bad.
For the company, two big insider sales have been witnessed in a relatively short period of time. Marc Andreessen, a venture capitalist and board member at Facebook, recently sold a majority of his stake in the social network. On Oct. 30, Andreessen sold 1.5 million shares or more than 73% of his total stake in the company for a total value of $160 million.
Facebook director Jan Koum sold a major portion of his stake in Facebook on Nov. 16. Koum sold 2.81 million shares totaling $286.5 million.
Is there something wrong at Facebook?
Why they sold the shares is a big mystery as thing are going pretty well for Facebook. The social network is reporting robust numbers quarter after quarter and is foraying into other segments apart from social media to grow its revenue stream. Many are concerned that the market is already saturated, making it almost impossible for the company to continue growing at impressive rates.
“While I don’t believe that to be the case, it could be seen as a valid concern,” says Gordon Meagher of CNA Finance.
However, one thing is for sure, and that is that insiders are selling their shares, which is concerning for fundamental investors. As of now, mostly all analysts are bullish on Facebook, but “if these big sales continue, it may be a sign of bad things to come for the stock,” says Meagher.
Presently, Facebook has an average rating of Buy and a consensus price target of $120.10. On Friday, Facebook stock closed up 0.04% at $105.45. Year to date, the stock is up by over 35%, while in the last one month, it is up by almost 1%.