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While it’s been a great week for AppLovin Corporation (NASDAQ:APP) shareholders after stock gained 11%, they should consider it with a grain of salt. In spite of the relatively cheap prices, insiders made the decision to sell US$579m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.
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.
The Last 12 Months Of Insider Transactions At AppLovin
Over the last year, we can see that the biggest insider sale was by the Chief Technology Officer, Vasily Shikin, for US$190m worth of shares, at about US$328 per share. That means that an insider was selling shares at around the current price of US$308. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
In the last year AppLovin insiders didn't buy any company stock. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Check out our latest analysis for AppLovin
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).
Insiders At AppLovin Have Sold Stock Recently
The last three months saw significant insider selling at AppLovin. In total, Co-Founder Adam Foroughi sold US$37m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Insider Ownership Of AppLovin
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. AppLovin insiders own about US$29b worth of shares (which is 31% 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.
So What Does This Data Suggest About AppLovin Insiders?
An insider hasn't bought AppLovin 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 it is good to see that AppLovin is growing earnings. 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. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Our analysis shows 3 warning signs for AppLovin (1 can't be ignored!) and we strongly recommend you look at these before investing.