Looking back over the last several years, September has been a month where insiders have typically sold more shares of Snap Inc (NYSE: SNAP) stock. It has also been a time of year, given its limited history, of underperformance. Comparing the selling so far in September against past years, the number of shares being sold is the highest since September 2017. As the price attempts to rally over the past three weeks, it may be a good time to assess the opportunity going forward.
Since the beginning of the month, insiders in SNAP had sold nearly 6.2 million shares totaling over $139 million in two separate transactions. The selling came from the CEO and 10% owner Evan Spiegel and director Michael Lynton. The company has insider ownership of 11.28% of the shares outstanding and 46.45% institutional ownership.
The company began trading on the secondary market in May of 2017. Since that time, the company has seen its share price post significant losses in two of the three years, but never performed exceptionally well in any year during September. Since September 2018, the company has seen some of its highest insider selling months in terms of volume in September. Also, September 2020 is particularly significant with its highest monthly selling volume in its history and it’s only halfway through the month.
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Action to Take: Shares of SNAP has risen against the selling trend of the Technology and Communications sectors over the past two weeks. This pattern is significant and may likely see the price retest the July 9 high of $26.76. However, the seasonal trend and the insider selling does point to the price being somewhat overvalued at this level.