Etsy Insiders Sell US$3.1m Of Stock, Possibly Signalling Caution

Simply Wall St · 09/15/2023 11:07

Many Etsy, Inc. (NASDAQ:ETSY) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Etsy

The Last 12 Months Of Insider Transactions At Etsy

In the last twelve months, the biggest single sale by an insider was when the Independent Chairman, Frederick Wilson, sold US$1.7m worth of shares at a price of US$100 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$66.68. So it may not shed much light on insider confidence at current levels.

Etsy insiders didn't buy any shares over the last year. 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!

insider-trading-volume
NasdaqGS:ETSY Insider Trading Volume September 15th 2023

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders At Etsy Have Sold Stock Recently

The last three months saw some Etsy insider selling. Independent Director Marla Blow only netted US$44k selling shares, in that period. It's not great to see insider selling, nor the lack of recent buyers. But the selling simply isn't sufficiently substantial to be of much use as a signal.

Does Etsy Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Etsy insiders own about US$65m worth of shares. That equates to 0.8% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Etsy 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. We're a little cautious about the insider selling at Etsy. The modest level of insider ownership is, at least, some comfort. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 2 warning signs for Etsy (1 is a bit unpleasant!) and we strongly recommend you look at these before investing.

But note: Etsy may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.