Bezos is also cashing in
Warning signal for the stock market: Tech bosses are selling shares
March 25, 2024, 6:47 p.m
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It is 8.5 billion dollars for Amazon founder Jeff Bezos, more than 100 million each for Meta boss Mark Zuckerberg and Palantir founder Peter Thiel. Top managers and founders make money with their company’s shares. One expert speaks of a “pretty strong signal”.
After the record run of the last few weeks and months, do the stock markets still have potential for further price increases? Or is there a correction due after the generous profits? No expert can answer that clearly. While some warn that the German leading index DAX is “overbought”, which could indicate falling prices, others point out that the most important central bank in the world, the American Fed, has just confirmed the prospect of falling interest rates – which is what that means gives additional boost to stock markets. The technology sector is likely to be crucial for stock market developments. Tech giants such as Amazon, Meta or Microsoft and the chip manufacturer Nvidia are the most important drivers of the current stock market rally.
The financial consulting company Verity has now identified an indicator that suggests that technology stocks in particular may have reached a temporary peak. As a result, high-ranking managers and other insiders have recently sold significantly more shares in their own companies than bought them. The ratio of such insider sales to insider purchases is at its highest level since the first quarter of 2021, reports the Financial Times, citing data from Verity. As a reminder: After a further price increase until the fourth quarter of 2021, the stock markets collapsed. The US technology exchange Nasdaq lost around a third of its value within about a year, and the DAX lost around a quarter.
The insiders who are currently monetizing their own shares on a large scale include Amazon founder Jeff Bezos, the head of Facebook parent company Meta, Mark Zuckerberg and the co-founder of Palantir, Peter Thiel. Bezos sold 50 million Amazon shares last month, worth around $8.5 billion. His successor as Amazon boss, Andy Jassy, sold company shares for more than $21 million. Thiel and Zuckerberg each sold more than $100 million worth of stock in their companies.
“Never a good sign”
Such sales are not unusual in themselves and are not a warning sign. Since the prices of technology companies were still in the basement at the beginning of 2023, company insiders sold unusually few shares. According to the Financial Times, they are now apparently making up for some of this. Nevertheless, the sharp increase in insider sales is surprising and a sign that the current stock rally may have passed its peak. The newspaper quotes Verity’s chief research officer, Ben Silverman, as saying that he sees some “big names” among insider sales, particularly in the tech sector. “That’s out of character.”
Charles Elson, a professor of business management at the University of Delaware, told the FT that sales by high-ranking corporate insiders are “never a good sign.” It means that they believe they have found a better place to invest their money than their own company. If the top managers withdrew their money from their company because they assumed that the share price had reached its peak, then that was “a pretty strong signal to everyone else.”