Key points:
- Recent data suggests Palantir's insider selling might be coming to a stop
- Insiders often sell stock in order to meet tax obligations, not always acting on non-public bearish information
- Investors should keep a keen eye on Palantir's inside selling data in the months to come as a clearer signal
Palantir seems to be constantly under fire. Whether it’s speculation surrounding the companies growth prospects, client base, revenue streams, or the latest and perhaps most prominent ember in the fire – the drastic amount of insider selling since the company became public.
Insider selling is always contentious – unless a planned sale under Rule 105b-1 – as it normally means that executives are acting in real-time on company information, cutting ties before the information is released to the public.
Top-level executives are mandated to disclose trades relating to stock selling to the SEC; which can then be tracked by investors to stay somewhat ahead of the curve – but this isn’t the problem here. Palantir is turning heads due to the sheer amount of selling going on; consistently.
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Collectively, the company insiders have sold 126M in shares since going public, which equals over $2B and a total of 7.5% of the company’s total market capitalization – enough to startle even the most bullish of investors.
However, recent data illustrates a slight change within the company. Insider sales in December and January are down 99% from levels in November – signaling either a change of winds or a misunderstood period of selling. There are numerous reasons as to why insiders sell stock, and not all of them should raise red flags.
Often, executives need to meet certain tax obligations through selling stock, and although Palantir’s 7.5% seems overly excessive – reasons are not always as malicious as they might appear. A slowing in inside selling might open up buying opportunities for investors, but it might be worth waiting for data from the next month or two to confirm the slowdown.