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The recent price decline of 11% in Domo, Inc.'s (NASDAQ:DOMO) stock may have disappointed insiders who bought US$7.8m worth of shares at an average price of US$14.08 in the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth US$5.5m, which is not what they expected.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
View our latest analysis for Domo
Domo Insider Transactions Over The Last Year
The Founder Joshua James made the biggest insider purchase in the last 12 months. That single transaction was for US$4.3m worth of shares at a price of US$14.19 each. That means that even when the share price was higher than US$9.85 (the recent price), an insider wanted to purchase shares. 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. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Notably Joshua James was also the biggest seller.
Over the last year, we can see that insiders have bought 554.81k shares worth US$7.8m. But they sold 294.08k shares for US$4.1m. In the last twelve months there was more buying than selling by Domo insiders. 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!
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.
Insiders At Domo Have Sold Stock Recently
The last three months saw significant insider selling at Domo. In total, CTO & Executive VP of Engineering Daren Thayne dumped US$101k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
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. Domo insiders own about US$51m worth of shares. That equates to 14% 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.