Insider selling is usually not a strong signal because insiders sell for a variety of reasons including the need to diversify their investments, to fund a large purchase, paying for a child’s education, etc. This has been confirmed by academic research over several decades and aligns with what I have seen during the last 12 years of tracking insider transactions every week. The only times I pay attention to insider selling is when insiders as a group are selling significantly more than usual as we outlined in the article Insider Weekends: The Pied Piper Is Heading Out Of Town last November and when insiders are selling despite a big recent decline in the stock.
The selling by Airbnb (NASDAQ:ABNB) insiders despite the recent pullback in the stock caught my eye. Co-founder Joe Gebbia has been selling shares consistently over the last several months but he significantly increased his selling last week as outlined below. Airbnb has been near the top of my watchlist of 40 “broken growth” stocks and while I have started nibbling slowly, valuations still remain stretched especially in light of recent geopolitical events. We wrote the following in late January in our Insider Weekends post discussing the RV manufacturer Thor Industries,
