Insider transactions are often used by investors to get a glimpse of whether or not key stakeholders trust the long-term prospects of a business. When everything lines up — a stock that is crashing, for example, while insiders are selling shares, then it’s easy to draw conclusions and act accordingly.
That’s not what’s happening with Tesla (NASDAQ: TSLA), however — after struggling to achieve gains in the first three quarters of 2024, TSLA shares skyrocketed after Donald Trump’s election, owing to the billionaire’s close relationship with CEO Elon Musk.
At the time of publication, TSLA stock was trading at $328.79, having rallied by 49.74% over the last 30 days to bring year-to-date (YTD) returns up to 32.35%. Amidst this impressive bull run, major insiders are selling large positions — leading many investors to wonder whether or not sustained stock price growth is actually in the cards for the automaker.
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Director dumps 100,000 TSLA shares
Kathleen Wilson-Thompson, a member of Tesla’s board of directors, sold 100,000 TSLA shares on November 11, as revealed in an SEC Form 4 filing made public on November 13. Wilson-Thompson executed 22 transactions at prices ranging from $336.95 to $358.35 per Tesla share.
In total, she made roughly $34.6 million on the sales — however, her ownership stake hasn’t actually changed. In tandem with the sales, the director exercised options in two transactions — purchasing 5,103 shares at $16.1 apiece, and 94,897 shares at $14.99 per unit.
Once all is said and done, Wilson-Thompson is still holding 5,400 Tesla shares — just as many as she did before the insider sale.
Tesla insiders selling might not be a bearish signal
While every instance of insider selling appears bearish at first glance, most of these transactions aren’t actually an indicator that something is going wrong. For one, Wilson-Thompson’s sale was made pursuant to a 10b5-1 plan — meaning that it was scheduled in advance.
To be more precise, the plan was adopted on August 12 and made public on October 23 — the director intends to divest from an additional 200,000 shares by February 28, 2025.
The same filing reveals that two directors — Kimbal Musk and Robyn Denholm, have also put similar strategies in place. Denholm’s strategy could see her offload as many as 674,345 shares by June 18, 2025, while Musk’s arrangement allows for up to 152,088 shares to be sold before May 30, 2025.
With all of that in mind, this latest instance of insider selling cannot serve as a reliable bearish signal — TSLA stock is trading at its highest price since April of 2022, so it is a convenient time to lock in profits.
Perhaps more tellingly, Wilson-Thompson still has 200,000 shares to dispose of per her trading plan — if anything, this is a vote of confidence in the automaker’s medium-term prospects.
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