We are not to blame ServiceNow, Inc. (NYSE: NOW) shareholders if they are a bit worried about the fact that Chirantan Desai, the Chief Operating Officer recently acquired approximately US $ 3.3m selling shares at an average price of US $ 478. That sale reduced their total holding by 15% which is almost insignificant, but far from the worst we’ve seen.
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The Last 12 Months Of Insider Transactions On ServiceNow
In fact, Chirantan Desai’s recent sale was the largest sale of ServiceNow shares made by an insider individual in the past twelve months, according to our records. So clearly an insider wants to take money off the table, even less than the current price of US $ 492. As a general rule, we consider it discouraging when insiders sell below the current price, because it suggests that they are happy with the lower price. While insider selling isn’t a positive signal, we can’t be sure if it means insiders think shares are fully valued, so it’s only a weak signal. We noticed that the biggest single sale was only 15% held by Chirantan Desai.
Over the past year, we’ve seen more insiders selling ServiceNow components, than buying. You can see a visual description of insider transactions (by companies and individuals) over the past 12 months, below. If you want to know who sold, how much, and when, just click the graph below!
If you want to buy stocks that insiders buy, rather than sell, you might just want it Free list of companies. (Hint: insiders buy them).
Insider Ownership
I want to look at how many shares insiders own in a company, to help inform my perspective on how well they align with insiders. We usually want to see a relatively high level of insider ownership. It is exciting to see that ServiceNow insiders own 0.3% of the company, valued at approximately US $ 247m. Most shareholders would be happy to see this type of insider ownership, as it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Service InsidersNow?
Insiders have not bought ServiceNow stock in the past three months, but there are a few sellers. Zooming out, the long-term photo doesn’t give us much comfort. But it’s nice to see that ServiceNow is growing revenue. Although insiders own a lot of shares in the company (which is nice), our analysis of their transactions doesn’t make us feel confident about the company. So while it helps to know what insiders are doing in terms of buying or selling, it also helps to know the risks faced by a particular company. In terms of investment risks, we have identified 1 warning sign with ServiceNow and understanding that it should be part of your investment process.
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For purposes of this article, insiders are the individuals who report their transactions to the relevant regulatory body. We currently consider open market transactions and private dispositions, but not derivative transactions.
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