What does it say when a company has its product thrust into the spotlight for the first time and the insiders start dumping shares of the company? Now, insiders aren’t always the best at timing the market, but it does tell you a little bit about how much they believe in their product that they won’t bet part of their fortune on their product gaining more mass adoption.
Slack Technologies Inc (WORK) has been in the news a lot as the work-from-home trend, while initially forced, may be part of a broader renaissance. SLACK announced that they added 7,000 customers between February 1 and March 18. This is big news for a company that only added 5,000 customers in the previous 2 quarters. You would imagine that this trend will only continue as companies explore solutions that work for their remote workforce. It’s also likely that employers will realize that the need to maintain significant office space and commuting isn’t worth any collaborative disadvantages and security risks of people working remotely.
With the backdrop of such a favorable trend, why are insiders dumping shares. For example, Director John O’Farrell sold 892,990 shares for an average price of $20.54 on March 17 and 19. That nearly reduced his holdings be one-half. In fact, 30 different insides have sold shares since March 1. For companies over $1B, this is the highest amount of insider cluster selling of any other company that trades at least $10M in daily trade value.
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This information doesn’t necessarily make this a company a sell right now, in fact there is still a compelling reason to be long. However, it does indicate that management lacks the favorable outlook that many market commentators have for this company. Meaning that it may be wise to consider swing trading it for small incremental moves.
Action to Take: WORK is an entry opportunity with a $30.50 near-term target.