Insiders At Uber Technologies Sold US$14m In Stock, Alluding To Potential Weakness

Over the past year, many Uber Technologies, Inc. (NYSE:UBER) insiders sold a significant stake in the company which may have piqued investors' interest. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Uber Technologies

The Last 12 Months Of Insider Transactions At Uber Technologies

The Senior VP, Derek West, made the biggest insider sale in the last 12 months. That single transaction was for US$6.1m worth of shares at a price of US$68.57 each. That means that even when the share price was below the current price of US$72.05, 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 42% of Derek West's holding.

Insiders in Uber Technologies didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Uber Technologies Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Uber Technologies shares. Specifically, Chief Marketing Officer and Senior Vice President of Communications & Public Policy Jill Hazelbaker ditched US$2.6m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company 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's great to see that Uber Technologies insiders own 0.1% of the company, worth about US$218m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Uber Technologies Insider Transactions Indicate?

An insider hasn't bought Uber Technologies stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. But since Uber Technologies 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. In terms of investment risks, we've identified 3 warning signs with Uber Technologies and understanding these should be part of your investment process.

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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.