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Monster insider trade that was suspiciously timed for this stock

Monster insider trade that was suspiciously timed for this stock
Elmaz Sabovic

Insider stock trades always raise suspicions among regular shareholders, but when they occur just before announcements that only insiders would know about, the impact on stock prices can be significant. 

For example, CleanSpark (NASDAQ: CLSK) recently announced an $800 million stock offering, leading to a 20% dilution of the company’s value and causing CLSK shares to plummet by 10% in after-hours trading.

To make matters worse, Chair Matt Schultz sold 367,000 CLSK shares, totaling $8.5 million, on March 27.

Insider sales of CLSK stock. Source: Barchart
Insider sales of CLSK stock. Source: Barchart

In addition to Schultz, just last week, Zachary Bradford, the CEO, sold 443,000 shares worth almost $9 million.

Why did CleanSpark offer additional shares?

CleanSpark has significantly increased its number of outstanding shares, from just 4.46 million in 2019 to over 185 million as of the most recent filings.

The company’s recent cash raise aims to strengthen its balance sheet. According to its latest financial results, CleanSpark holds $229 million in liquidity, with $62.5 million in cash and 3,700 in Bitcoin (BTC).

Given its plans for expansion, particularly in Bitcoin mining, CleanSpark will need to increase spending in the coming months. The impending Bitcoin halving, scheduled for April, will decrease block rewards and reduce daily mined coins to around 450. Consequently, unless Bitcoin prices remain stable, companies like CleanSpark may experience lower revenues.

CLSK stock price chart

As of the most recent closing on March 28, CLSK stock was priced at $21.21, marking an 8.22% decrease in the latest trading session. Over the past five trading sessions, CLSK has gained 7.01%, indicating the recent volatility of this stock.

CLSK stock YTD price chart. Source: Google Finance
CLSK stock YTD price chart. Source: Google Finance

Since the beginning of 2024, CLSK stock has surged impressively by over 94%.

The upcoming Bitcoin halving is increasingly seen as a crucial event, particularly for companies focused on mining the primary cryptocurrency and building infrastructure to support it.

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