Stock Analysis

As Eterna Therapeutics Inc. (NASDAQ:ERNA) drops to US$16m market cap, insiders might rethink their US$2.7m stock purchase earlier this year

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The recent 12% drop in Eterna Therapeutics Inc.'s (NASDAQ:ERNA) stock could come as a blow to insiders who purchased US$2.7m worth of stock at an average buy price of US$3.28 over the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth US$2.5m, which is not great.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Eterna Therapeutics

The Last 12 Months Of Insider Transactions At Eterna Therapeutics

Over the last year, we can see that the biggest insider purchase was by insider John Halpern for US$1.1m worth of shares, at about US$3.28 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$3.10). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While Eterna Therapeutics insiders bought shares during the last year, they didn't sell. 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!

NasdaqCM:ERNA Insider Trading Volume March 16th 2023

Eterna Therapeutics is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership Of Eterna Therapeutics

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. Eterna Therapeutics insiders own about US$4.9m worth of shares. That equates to 31% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Eterna Therapeutics Tell Us?

It doesn't really mean much that no insider has traded Eterna Therapeutics shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders own shares in Eterna Therapeutics and we see no evidence to suggest they are worried about the future. 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. Case in point: We've spotted 5 warning signs for Eterna Therapeutics you should be aware of, and 3 of them are a bit unpleasant.

Of course Eterna Therapeutics 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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