Despite the fact that Groupon, Inc. (NASDAQ:GRPN) stock rose 21% last week, insiders who sold US$37m worth of stock in the previous 12 months are likely to be better off. Holding on to stock would have meant their investment would be worth less now than it was at the time of sale. Thus selling at an average price of US$7.28, which is higher than the current price, may have been the best decision.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
View our latest analysis for Groupon
The Last 12 Months Of Insider Transactions At Groupon
In the last twelve months, the biggest single sale by an insider was when the Board Observer & Independent Director, Jan Barta, sold US$21m worth of shares at a price of US$7.28 per share. That means that even when the share price was below the current price of US$13.61, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was 100% of Jan Barta's holding.
Insiders in Groupon didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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Insider Ownership Of Groupon
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Insiders own 17% of Groupon shares, worth about US$69m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Groupon Insiders?
The fact that there have been no Groupon insider transactions recently certainly doesn't bother us. Still, the insider transactions at Groupon in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Groupon. When we did our research, we found 4 warning signs for Groupon (1 is concerning!) that we believe deserve your full attention.
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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 of direct interests only, but not derivative transactions or indirect interests.
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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.
