Analyzing changes in insider ownership can provide investors with crucial insights into a company. Generally, if insider buying is high or rising, it indicates the company’s management team is bullish on the long-term prospects of the firm.
Alternatively, insiders might sell their shares for a variety of reasons - but when the company in question is mega-cap FAANG name Amazon.com (AMZN), and the insider in question is company founder Jeff Bezos himself, those stock sales are bound to grab headlines.
Keeping this in mind, let’s take a look at those recent stock sales by Bezos, and who owns how much of Amazon stock now.
Jeff Bezos Still Owns 9.56% of Amazon
According to regulatory filings, Amazon’s former CEO and current Chair, Jeff Bezos, unloaded $240 million worth of shares last month - and might continue to lower his position in the tech giant. In fact, Bezos might sell more AMZN shares worth up to $1 billion over the next 12 months. The stocks Bezos sold in November were classified as contributions to not-for-profit-organizations.
Following the recent sales, Bezos remains the company’s largest shareholder with a stake of 9.56%, followed by a slew of institutional investors and index funds such as Vanguard, Invesco (IVZ), and Fidelity (FIS). Around 29.6% of AMZN stock is owned by institutional investors, compared to individual investors at 42.5%.
Bezos is currently the third richest person on the planet, and owns 988 million shares in Amazon following the recent stock donations. He stepped down as the CEO of Amazon in 2021, and plans to donate a majority of his fortune to charitable organizations.
Additionally, he sells $1 billion of company stock each year to provide liquidity to Blue Origin, his space-tech company. Moreover, Bezos launched a $10 billion Earth Fund back in 2020 to combat issues relating to climate change.
According to filings, Bezos has “given away” Amazon shares worth $546 million in 2023.
How to Interpret Insider Selling
According to Peter Lynch, one of the most famous investors on Wall Street, “Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.”
Investors need to analyze the collective buying and selling behavior of company insiders, rather than individual trades. For instance, you should be more interested if an insider is buying a beaten-down stock when overall market sentiment is negative, as it suggests an upcoming bullish trend.
If there are indications of cluster buying (where multiple insiders purchase the stock), it may be a good signal as it suggests “communal optimism” about a company’s future. Further, it's more informative to prioritize transactions by the executive management team - such as CEOs and CFOs - as compared to other directors and lower-level insiders.
What Does Recent Selling Activity Tell Us About Amazon Stock?
All things considered, Amazon investors should not be worried about the recent selling of shares by Jeff Bezos. It's evident that Bezos is liquidating his stake to make regular donations as a philanthropist, which was disclosed earlier.
Amazon remains a high-quality Big Tech stock that’s firing on all cylinders. It leads several growth markets, such as e-commerce, public cloud, digital advertising, and online streaming.
In recent quarters, the tech giant has shifted its focus toward improving its bottom line, and is forecast to improve EPS to $3.55 in 2024, compared to a loss of $0.27 per share in 2022.
Out of the 40 analysts covering AMZN, 36 recommend “strong buy,” three recommend “moderate buy,” and one recommends “hold.” The average target price for Amazon stock is $172.78, which is 20% above the current price.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
