Tesla stock (NASDAQ: TSLA) has been on a steady downward trajectory since mid-January.
The electric vehicle (EV) maker’s last earnings call saw a rare double miss. Earnings per share (EPS) came in at $0.73, below consensus estimates of $0.76. Revenues of $25.71 billion also underperformed analyst expectations, which were pegged at $27.26 billion. January marked the first instance in which year-over-year (YoY) vehicle deliveries declined.
All the while, Chief Executive Officer (CEO) Elon Musk’s highly visible and polarizing political involvement has led to significant backlash, as well as a boycott of the company.
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At press time on March 13, the price of a single TSLA share was $236.45. Despite a 6.43% rally from a $222.15 bottom on March 9, Tesla stock is currently down 24.79% on a year-to-date (YTD) basis.
Amidst ever-bleaker outlooks, company insiders have intensified the pace of their liquidations. In the first month of the year, insiders dumped more than $44 million worth of Tesla stock.
Finbold’s insider trading radar has now picked up another sale — and there’s a particularly interesting detail that sets it apart from other similar transactions.
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Board member sells $13 million worth of Tesla stock
On March 10, James Murdoch, a member of Tesla’s board, executed three transactions, per a recently released SEC Form 4 filing. The first two involved exercising stock options. Murdoch leveraged options to purchase 180,000 Tesla shares for $23.85 apiece and 351,787 TSLA shares at a price of $24.73 per unit.
Those acquisitions set him back $4,293,000 and $8,699,692 — for a grand total of $12,992,692.
Murdoch also sold 54,776 units of Tesla stock on the same day, at an average price of $240.78. That sale netted him $13,188,965, for an overall profit of $196,273.
That seems pretty standard-fare — but a closer look at the filing in question reveals that this was not your garden variety insider sale. Most transactions like this are scheduled well in advance through the use of 10b5-1 plans. Murdoch’s transaction was not — and while this is perfectly legal, it does attract added scrutiny from regulators.
Moreover, it’s a more reliable bearish signal, compared to regular insider selling. For one reason or another, the board member deemed this an opportune time to sell Tesla stock — even with recent losses accounted for.
In other words, this could herald further moves to the downside. As reported by Finbold, Tesla’s short volume ratio has been trending upward as of late — and banking giant JPMorgan recently slashed its price target on the stock from $135 to just $120.
Featured image via Shutterstock
