Don't Ignore The Insider Selling In Rocket Lab USA

Anyone interested in Rocket Lab USA, Inc. (NASDAQ:RKLB) should probably be aware that the CFO, Secretary & Treasurer, Adam Spice, recently divested US$353k worth of shares in the company, at an average price of US$5.74 each. The eyebrow raising move amounted to a reduction of 17% in their holding.

View our latest analysis for Rocket Lab USA

Rocket Lab USA Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Chief Engineer of Special Programs, Shaun O’Donnell, for US$1.1m worth of shares, at about US$5.63 per share. That means that an insider was selling shares at slightly below the current price (US$6.31). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 22% of Shaun O’Donnell's holding.

Rocket Lab USA insiders didn't buy any shares over 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!

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).

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. Rocket Lab USA insiders own about US$358m worth of shares (which is 12% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Rocket Lab USA Tell Us?

Insiders haven't bought Rocket Lab USA stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Rocket Lab USA. While conducting our analysis, we found that Rocket Lab USA has 3 warning signs and it would be unwise to ignore these.

But note: Rocket Lab USA 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.