While Warby Parker Inc. (NYSE:WRBY) shareholders have enjoyed a good week with stock up 14%, they need remain vigilant. In spite of the relatively cheap prices, insiders made the decision to sell US$1.2m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Warby Parker Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Independent Director Bradley Singer for US$966k worth of shares, at about US$13.00 per share. We do like to see buying, but this purchase was made at well below the current price of US$19.31. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

All up, insiders sold more shares in Warby Parker than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Insiders At Warby Parker Have Bought Stock Recently

Over the last quarter, Warby Parker insiders have spent a meaningful amount on shares. Specifically, Independent Director Bradley Singer bought US$966k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Warby Parker insiders own about US$445m worth of shares (which is 20% 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 Do The Warby Parker Insider Transactions Indicate?

It is good to see the recent insider purchase. But we can't say the same for the transactions over the last 12 months. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Warby Parker insiders are reasonably well aligned, and optimistic for the future. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 1 warning sign for Warby Parker you should be aware of.

But note: Warby Parker may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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 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.