Yahoo Finance For ServiceNow, Inc. (NYSE:NOW) insiders, selling US$19m worth of stock earlier this year was a smart move.
Even though ServiceNow, Inc. (NYSE:NOW) stock gained 6.3% last week, insiders who sold US$19m worth of stock over the past year are probably better off. Selling at an average price of US$517, which is higher than the current price, may have been the wisest decision for these insiders as their investment would have been worth less now than when they sold.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
View our latest analysis for ServiceNow
ServiceNow Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Chief Operating Officer, Chirantan Desai, for US$3.3m worth of shares, at about US$479 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$401. So it may not tell us anything about how insiders feel about the current share price.
Over the last year we saw more insider selling of ServiceNow shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
ServiceNow Insiders Are Selling The Stock
The last three months saw significant insider selling at ServiceNow. In total, insiders dumped US$4.8m 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
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. ServiceNow insiders own about US$195m worth of shares (which is 0.2% 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 Do The ServiceNow Insider Transactions Indicate?
Insiders sold stock recently, but they haven't been buying. And our longer term analysis of insider transactions didn't bring confidence, either. But since ServiceNow is profitable and growing, we're not too worried by this. 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 we like knowing 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. Every company has risks, and we've spotted 1 warning sign for ServiceNow you should know about.
Of course ServiceNow may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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, but not derivative transactions.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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