Lots of Selling and no Buying from Coinbase Global's, Inc. (NASDAQ:COIN) Insiders since the IPO

August 09, 2021
  •  Updated
November 27, 2022
Source: Shutterstock

Insiders take companies public in order to raise capital, reduce risk, and with that, improve the chances in the competitive landscape. However, some companies are taken public, at least in part, to allow venture capitalists, insiders and private investors to cash out. That is why we are going to take a look at what insiders have been doing since the IPO of Coinbase Global, Inc. (NASDAQ:COIN).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.

Check out our latest analysis for Coinbase Global

Coinbase Global Insider Transactions Over The Last Year

The Chairman & CEO, Brian Armstrong, made the biggest insider sale in the last 12 months. That single transaction was for US$292m worth of shares at a price of US$410 each.

Important insight can be found in the lack of activity.

In the case of Coinbase Global, insiders didn't buy any shares after the IPO. This is a crucial point, and a few implications can be discussed just on that non-event alone. Note, that these are skeptical possibilities, not an inference or claim on the motives of insiders.

Let's go over some possible reasons for this:

  • Insiders find the current price of Coinbase to be overvalued
  • The (partial) goal of the IPO was to cash out, not to improve the business
  • Insiders do not see a meaningful future improvement
  • Insiders see the company as involved in a high-risk business
  • Insiders already have plenty of shares at their disposal

The stock dipped around US$230 per share, and no insiders have been registered purchasing their company stock.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below.

NasdaqGS:COIN Insider Trading Volume August 9th 2021

Now we come to the final part, and that is the selling of stock by insider individuals and institutions. Since the IPO insiders have sold more than US$2.4b worth of stock in Coinbase. Further, they have been selling continuously even as the share price was slowly heading lower. There is a possibility that this behavior is innocent, and insiders still believe in their company, but actions do speak louder than words, and investors would do well to be cautious.

You can argue, that some amount of selling is justified for the previous hard work and dedication, however as we have seen above, insiders had ample opportunities to showcase their convictions, rather than express them online.

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

Does Coinbase Global Boast High Insider Ownership?

On the bright side, Coinbase Global insiders still own 24% of the company, currently worth about US$13b based on the recent share price. That is quite a portion which most shareholders would be happy to see.

Key Takeaways

Insiders haven't bought Coinbase stock since the IPO.

Insiders sold more than US$2.6b worth of shares since the IPO.

They do still own a combined 24% stake in Coinbase, but investors should be aware of the actions underlying their stated convictions for the future of their company.

So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that Coinbase Global has 1 warning sign and it would be unwise to ignore it.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Coinbase Global is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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Simply Wall St analyst Goran Damchevski and Simply Wall St have no position in any of the companies mentioned. This article 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.