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MicroStrategy Director Dumps 12,000 Shares: Insider Selling or Profit Taking?

Last Updated February 19, 2024 12:13 PM
Giuseppe Ciccomascolo
Last Updated February 19, 2024 12:13 PM

Key Takeaways

  • Carl Rickertsen, a director at MicroStrategy, sold 12,000 company shares.
  • This follows a pattern of insider selling with no recorded purchases over the past year.
  • Is this a sell-the-stock sign or just a profit-taking?

In a move that raised eyebrows among investors, Carl Rickertsen, a director at MicroStrategy Inc (MSTR), made a significant sale of 12,000 shares on February 12, 2024, as disclosed in a recent Securities and Exchanges Commission (SEC) filing .

There is no history of purchases made by Rickertsen. So the market asked: is this an insider selling or just profit-taking?

Rickertsen Moves Under Market Scrutiny

MicroStrategy Inc., known for its enterprise analytics and mobility software, including flagship offerings like MicroStrategy Analytics, MicroStrategy Mobile, and the Usher mobile identity platform, has long been a frontrunner in giving organizations actionable business insights.

However, Rickertsen’s recent sale is just one piece of a larger puzzle when examining his transaction history over the past year, which has seen a total divestment of 14,000 shares without any corresponding purchases.

This pattern of insider selling, combined with a lack of insider buys and a substantial 45 insider sells over the past year, has undoubtedly piqued investor interest. It also led to speculation about the company’s future prospects.

MicroStrategy Price-Earnings Ratio Above Market Average

On the day of Rickertsen’s sale, MicroStrategy shares were trading at $697.34, reflecting a market capitalization of $12.963 billion. What’s more concerning is the stock sky-high price-earnings ratio of 595.74, soaring well above the industry median of 26.71 and even surpassing the company’s historical median price-earnings ratio. These metrics paint a picture of a stock that appears significantly overvalued.

MicroStrategy P/E ratio
MicroStrategy P/E ratio I Source: Companies Market Cap

This is a sentiment echoed by the price-to-GuruFocus-Value ratio of 2.42, indicating that the stock is significantly overvalued ,based on its GuruFocus Value of $288.38.

The GuruFocus Value , derived from historical trading data, adjustments for past performance, and future estimates from Morningstar, highlights potential risks in MicroStrategy valuation. Investors should balance the company’s innovations with insider selling and high valuation metrics, approaching the market with caution and diligence.

Is MSTR Stock To Buy Or To Sell?

Rickertsen is not the only person involved with MicroStrategy to make notable moves in the company’s stock recently. The company’s founder and CEO, Michael Saylor, sold 5,000 shares for a substantial sum of $3,416,641 on February 13, 2024. With these insider actions in mind, investors are left pondering: should they buy or sell MSTR?

Analysts closely monitoring the stock assert  that despite recent insider sales, MSTR presents a compelling opportunity for investors. In fact, they go as far as labeling it a “strong buy” chance.

Analysts covering MSTR stock
Analysts covering MSTR stock I Source: MarketWatch

Considering the stock’s high artificial intelligence (AI) score and positive trends from alternative data, MicroStrategy shows promise. Additionally, the company’s substantial holdings in cryptocurrencies, especially Bitcoin, align with MSTR’s stock performance.

Given these considerations and the recent uptick in the stock price, many investors may interpret the current sentiment as a signal that now could be an auspicious moment to invest in MicroStrategy.

Nevertheless, investors must conduct thorough due diligence, assess their investment strategies, and evaluate their risk tolerance before making any investment decisions. As always, prudent and informed decision-making is paramount in navigating the complexities of the financial markets.

Michael Saylor Leads Top Shareholders List

The ownership landscape of MicroStrategy stock is a dynamic tapestry. It features a blend of institutional powerhouses, retail investors, and individuals. Institutional investors claim a lion’s share, holding approximately 54.52% of the company’s stock, while insiders retain a modest 0.40%, leaving the remaining 45.08% in the hands of public companies and individual investors.

Microstrategy top shareholders
Microstrategy top shareholders I Source: SimplyWallStreet

At the helm of ownership stands the company’s founder and CEO, Michael Saylor, wielding a formidable two million shares. This package of shares has an impressive value of $1.4 billion.

Capital Research and Management Company holds 1.7 million shares valued at $1.2 billion. The Vanguard Group, Inc. follows with 1.1 million shares, worth $809.2 million.

Other major shareholders include Blackrock, FMR, Jane Street Group, Morgan Stanley, Susquehanna International Group, State Street Global Advisors, and Geode Capital Management. All of them contribute significantly to MicroStrategy’s ownership and strategic vision.

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