ServiceNow, Inc. (NYSE:NOW) insiders who sold US$19m worth of stock earlier this year are probably glad they did so as market cap slides to US$73b
Insiders at ServiceNow, Inc. (NYSE:NOW) sold US$19m worth of stock at an average price of US$515 a share over the past year, making the most of their investment. The company's market valuation decreased by US$12b after the stock price dropped 14% 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, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for ServiceNow
ServiceNow Insider Transactions Over The Last Year
The Chief Operating Officer, Chirantan Desai, made the biggest insider sale in the last 12 months. That single transaction was for US$3.3m worth of shares at a price of US$479 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of US$362. So it is hard to draw any strong conclusion from it.
Over the last year we saw more insider selling of ServiceNow shares, than buying. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
ServiceNow Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at ServiceNow. In total, insiders dumped US$2.8m 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
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It's great to see that ServiceNow insiders own 0.2% of the company, worth about US$171m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The ServiceNow Insider Transactions Indicate?
Insiders sold stock recently, but they haven't been buying. And our longer term analysis of insider transactions didn't bring confidence, either. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. While we like knowing 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. Every company has risks, and we've spotted 1 warning sign for ServiceNow you should know about.
But note: ServiceNow 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, 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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