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Viewing insider transactions for Shopify Inc.'s (NYSE:SHOP ) over the last year, we see that insiders were net buyers. This means that a larger number of shares were purchased by insiders in relation to shares sold.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Check out our latest analysis for Shopify
The Last 12 Months Of Insider Transactions At Shopify
Over the last year, we can see that the biggest insider purchase was by Founder Tobias Lütke for US$10.0m worth of shares, at about US$35.34 per share. Even though the purchase was made at a significantly lower price than the recent price (US$54.57), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Shopify is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Shopify Insiders Are Selling The Stock
Over the last three months, we've seen a bit of insider selling at Shopify. President Harley Finkelstein divested only US$12k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the volume sold is so low that it really doesn't bother us.
Insider Ownership Of Shopify
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Shopify insiders own about US$4.3b worth of shares (which is 6.3% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Shopify Insiders?
While there has not been any insider buying in the last three months, there has been selling. But the sales were small, so we're not concerned. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Shopify insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.