Netflix (NFLX) is down nearly 50% from its all-time high of $423.21. Its FAANG peer Apple (AAPL) is doing a lot better as it is only 6% away from the all-time peak of $233.47. However, something tells us that the iPhone maker is likely to follow suit.
That’s because these two tech giants have something in common. Their executives are cashing out while shares are trading near historic highs. This is an indication that the overall market uptrend might be over.
A recent CCN.com article about Facebook’s C-level employees dumping equities encouraged us to dig deeper to see if executives of other FAANG companies were also selling their shares. It turns out the top brass of Netflix and Apple have been ahead of their Facebook counterparts as they’ve been liquidating shares for over a year.
For instance, Netflix execs sold 992,813 shares since August 2018 for a whopping $324.6 million.
It is also very interesting to note that during this period only one Netflix insider bought company stocks. Bradford Smith’s purchase of 6,499 shares is the only transaction of its nature for over a year. Everybody else was busy cashing out.
Not surprisingly, the biggest seller of them all is the company CEO, Reed Hastings. The top honcho dumped 916,706 shares for a cool profit of $298.87 million.
Also, the big boss of the on-demand video streaming firm sold between the price range of $370 to $241.12. This may be a sign that he was aware that the winds have changed and the time to cash out has come.
Apple’s list of sellers may be shorter than Netflix’s but its executives sold way more equities. From August 2018 to August 2019, the big wigs of the tech firm sold 1,021,199 shares to the tune of $219.178 million.
One key thing to note is that during the course of the year, no insider purchased Apple shares. This tells us that it may be possible that those in the know do not expect the stock to dramatically rise in the future.
More importantly, the biggest seller is none other than the chief executive officer, Tim Cook. The CEO dumped 530,320 shares and effectively halved his Apple holdings. As a result, Tim Cook received $112.415 million in profits.
Insider selling may not necessarily raise a red flag. However, if virtually no one from these two companies is buying while executives are dumping, then perhaps it is time to consider following their lead.
Last modified: September 23, 2020 1:06 PM