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The recent 11% drop in Robinhood Markets, Inc.'s (NASDAQ:HOOD) stock could come as a blow to insiders who purchased US$2.0m worth of stock at an average buy price of US$38.00 over the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth US$653k which is not ideal.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for Robinhood Markets
Robinhood Markets Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Lead Independent Director Jonathan Rubinstein for US$2.0m worth of shares, at about US$38.00 per share. That means that even when the share price was higher than US$12.41 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Jonathan Rubinstein was the only individual insider to buy during the last year.
You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Robinhood Markets 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 Robinhood Markets
Many investors like to check how much of a company is owned by 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. Robinhood Markets insiders own about US$1.5b worth of shares (which is 14% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Robinhood Markets Tell Us?
The fact that there have been no Robinhood Markets insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, Robinhood Markets insiders feel good about the company's future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - Robinhood Markets has 1 warning sign we think you should be aware of.