Don't Ignore The Insider Selling In AppLovin

Some AppLovin Corporation (NASDAQ:APP) shareholders may be a little concerned to see that the Co-Founder, Adam Foroughi, recently sold a substantial US$19m worth of stock at a price of US$422 per share. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 1.5%.

View our latest analysis for AppLovin

AppLovin Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Chief Technology Officer, Vasily Shikin, sold US$190m worth of shares at a price of US$328 per share. That means that even when the share price was slightly below the current price of US$331, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 11% of Vasily Shikin's holding.

AppLovin insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Insider Ownership

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. AppLovin insiders own 31% of the company, currently worth about US$40b based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About AppLovin Insiders?

Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. But since AppLovin is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 3 warning signs for AppLovin you should know about.

But note: AppLovin 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 of direct interests only, but not derivative transactions or indirect interests.

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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.