Favorable turn of events for Robinhood Markets, Inc. (NASDAQ:HOOD) insiders who've lost US$1.3m to date on a US$2.0m purchase

By
Simply Wall St
Published
March 23, 2022
NasdaqGS:HOOD
Source: Shutterstock

Insiders who purchased US$2.0m worth of Robinhood Markets, Inc. (NASDAQ:HOOD) shares over the past year recouped some of their losses after price gained 22% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled US$1.3m since the time of purchase.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Robinhood Markets

Robinhood Markets Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Lead Independent Director Jonathan Rubinstein bought US$2.0m worth of shares at a price of US$38.00 per share. That means that an insider was happy to buy shares at above the current price of US$13.42. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. The only individual insider to buy over the last year was Jonathan Rubinstein.

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!

insider-trading-volume
NasdaqGS:HOOD Insider Trading Volume March 23rd 2022

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Robinhood Markets insiders own 14% of the company, worth about US$1.6b. 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 Robinhood Markets Insider Transactions Indicate?

The fact that there have been no Robinhood Markets insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Judging from their transactions, and high insider ownership, Robinhood Markets insiders feel good about the company's future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Robinhood Markets. In terms of investment risks, we've identified 2 warning signs with Robinhood Markets and understanding these should be part of your investment process.

Of course Robinhood Markets may not be the best stock to buy. So you may wish to see this free collection of high quality 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.

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