Meituan's (HKG:3690)) market cap declines to HK$1.2t but insiders who sold CN¥1.2b stock were able to hedge their losses

Simply Wall St
February 19, 2022
Source: Shutterstock

By selling CN¥1.2b worth of Meituan (HKG:3690) stock at an average sell price of CN¥277 over the last year, insiders seemed to have made the most of their holdings. The company's market valuation decreased by HK$244b after the stock price dropped 17% 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.

View our latest analysis for Meituan

The Last 12 Months Of Insider Transactions At Meituan

The insider, Nanpeng Shen, made the biggest insider sale in the last 12 months. That single transaction was for HK$768m worth of shares at a price of HK$287 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (HK$188). So it may not tell us anything about how insiders feel about the current share price.

Meituan insiders didn't buy any shares 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!

SEHK:3690 Insider Trading Volume February 19th 2022

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at Meituan Have Sold Stock Recently

The last quarter saw substantial insider selling of Meituan shares. In total, Co-Founder Xing Wang sold HK$3.0m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Does Meituan Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Meituan insiders own about HK$143b worth of shares (which is 12% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Meituan Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. 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 Meituan. Case in point: We've spotted 3 warning signs for Meituan you should be aware of.

But note: Meituan 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.