Several of Shopify’s (NYSE:SHOP) corporate insiders have recently been selling SHOP stock. The Canada-based e-commerce company provides a platform for small businesses to build online stores and sell products.
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So far in May, President Harley Finkelstein has disposed of 23,996 shares of the company in the past seven days, for a total value of $1.44 million. Further, Shopify’s Lead Independent Director, Robert Ashe, sold 111,562 shares of SHOP stock last week for $6.4 million.
Importantly, the transactions were undertaken after the release of the first-quarter earnings on May 4. At the earnings call, the management guided that it expects Q2 revenues to “grow at a similar rate to the first quarter growth rate on a year-over-year basis.”
As a result, it may be reasonable to infer that insiders are not overly optimistic about the company’s prospects for immediate success. Despite the corporation seeing a 25% increase in sales during the first quarter, operating losses are still a cause for worry. Additionally, investor trust in the business is still being damaged by the downturn in the e-commerce sector.
As per TipRanks’ Insider Trading Activity Tool, the Insider Confidence Signal for Shopify is Very Negative based on the transactions made by insiders over the past three months. Generally, insider selling is viewed negatively by investors and indicates that the stock might underperform.
Interestingly, TipRanks offers daily insider transactions as well as a list of top corporate insiders. It also provides a list of hot stocks that boast either a Very Positive or Positive insider confidence signal.
Is Shopify a Buy, Sell, or Hold?
The Street is cautiously optimistic about SHOP stock with a Moderate Buy consensus rating, based on 12 Buys, 20 Holds, and one Sell. The average price target of $60.17 implies 1.9% downside potential from current levels.
It is worth highlighting that analyst Todd Coupland of CIBC is the most accurate analyst in the case of SHOP stock. He has had a 100% success rate in his 12 ratings on Shopify. Importantly, replicating Coupland’s trades for a year would yield an average return of 86.86% per trade. Click on the image to learn more.
