Don't Ignore The Fact That This Insider Just Sold Some Shares In TrueCar, Inc. (NASDAQ:TRUE)

By
Simply Wall St
Published
March 21, 2021
NasdaqGS:TRUE
Source: Shutterstock

Investors may wish to note that the Executive Vice President of Dealer Sales & Service of TrueCar, Inc., Simon Smith, recently netted US$57k from selling stock, receiving an average price of US$5.16. However we note that the sale only shrunk their holding by 4.8%.

See our latest analysis for TrueCar

The Last 12 Months Of Insider Transactions At TrueCar

Notably, that recent sale by Executive Vice President of Dealer Sales & Service Simon Smith was not the only time they sold TrueCar shares this year. Earlier in the year, they fetched US$4.94 per share in a -US$146k sale. So it's clear an insider wanted to take some cash off the table, even below the current price of US$5.05. 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. We note that the biggest single sale was only 10%of Simon Smith's holding.

Simon Smith ditched 58.70k shares over the year. The average price per share was US$4.95. 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:TRUE Insider Trading Volume March 21st 2021

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 of TrueCar

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that TrueCar insiders own 3.4% of the company, worth about US$17m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The TrueCar Insider Transactions Indicate?

An insider sold TrueCar shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. 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. At Simply Wall St, we found 1 warning sign for TrueCar that deserve your attention before buying any shares.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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. 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.
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