As Canoo Inc.'s (NASDAQ:GOEV)) market cap dropped by US$62m, insiders who sold US$87m worth of stock were able to offset their losses

By selling US$87m worth of Canoo Inc. (NASDAQ:GOEV) stock at an average sell price of US$5.75 over the last year, insiders seemed to have made the most of their holdings. After the stock price dropped 19% last week, the company's market value declined by US$62m, but insiders were able to mitigate their losses.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Canoo

Canoo Insider Transactions Over The Last Year

The insider, Pak Tam Li, made the biggest insider sale in the last 12 months. That single transaction was for US$69m worth of shares at a price of US$6.53 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 silver lining is that this sell-down took place above the latest price (US$0.60). So it may not tell us anything about how insiders feel about the current share price.

In the last year Canoo insiders didn't buy any company stock. 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: insiders have been buying them).

Canoo Insiders Are Selling The Stock

Over the last three months, we've seen a bit of insider selling at Canoo. Insiders only netted US$35k selling shares, in that period. It's not great to see insider selling, nor the lack of recent buyers. But the selling simply isn't sufficiently substantial to be of much use as a signal.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Canoo insiders own about US$21m worth of shares. That equates to 8.0% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Canoo Tell Us?

Our data shows a little more insider selling, but no insider buying, in the last three months. However, the sales are not big enough to concern us at all. Recent sales exacerbate our caution arising from analysis of Canoo insider transactions. The modest level of insider ownership is, at least, some comfort. 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. For example, Canoo has 4 warning signs (and 2 which are significant) we think you should know about.

But note: Canoo 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.