09 December 2021

Market News

Corporate insiders and CEOs are cashing out: What you should know

CEOs and insiders of big corporations have sold off more than $69 billion in tech stock so far in 2021. According to CNBC, CEOs, entrepreneurs, and executives are selling their company stocks at a record pace, up 30% from 2020.

According to analysts, sales are anticipated to climb even more by the end of December, which is often one of the busiest months for stock sales due to tax planning purposes. With Washington state imposing a 7% tax on capital gains over $250,000, it’s not surprising that big money is taking profits now. Of course, the selloff isn’t doing any favors to Wall Street, especially with the FED tapering on the horizon and the uncertainty caused by the Omicron variant. However, perhaps this isn’t a selling signal, but a blessing in disguise for stock market bulls come 2022.

Who’s selling

Elon Musk and Jeff Bezos are leading the selloff as each has thus far sold roughly $10 billion in stock this year. Towards the end of November, Musk sold an additional $1 billion in Tesla stock, ostensibly as a response to concerns over the higher tax rates.

Amazon’s Jeff Bezos, sold $9.97 billion in stocks. While this is basically in line with his strategy from the previous year, it’s at least four times higher than his sales in 2019.

The Walton family, on the other hand, sold $6.18 billion in Walmart stocks. The family has a history of regular stock offloading to preserve their shareholding and support their humanitarian efforts.

Mark Zuckerberg also took a spot on the list by selling $4.47 billion of stocks from his Meta company. This is in line with the 10b5-1 plans and the first selloff after changing the company name from Facebook to Meta.

Larry Page and Sergey Brin, founders of Google, also sold $1.5 billion of Alphabet shares as part of their 10b5-1 plans.

What opportunities lie ahead

If we take a look at the recent performance of the stock market, we can see that the prices are currently under pressure. According to the latest data published by CNBC, all the top tech companies saw a drop in share values with Tesla, Meta, and Adobe sustaining up to 6% in weekly losses. The only tech company that managed to stay in the green was Apple.

However, despite sustaining a blow after the selloff, there may be an opportunity for investors to buy the dip and take advantage of the potential correction in 2022.

Tech stocks have proven resilient to the fallout of the pandemic and the market is more than likely to recover even if it sustains short-term losses due to profit taking. In fact, most of the tech giants have thrived over the last two years with stocks of Tesla and Apple gaining well over 150%.

Revenues have also been enjoying a healthy increase. Apple’s fourth-quarter revenues hit a record $83 billion – up 29% YoY. Alphabet also outperformed the S&P 500 with returns upwards of 75% and a quarterly revenue of $65 billion.

Is now a good time to enter the market?

It’s always important to consider that financial markets are inherently unpredictable, and most of the time trends can be short lived.

Thankfully, you have access to financial data that can help you make informed decisions such as the quarterly earnings reports published by the companies they wish to invest in as well as economic reports and the historical price performance of the assets on the chart itself.

Some sectors have performed better than others amid the uncertainty, but at the end of the day, timing your entry will largely depend on risk tolerance and the asset of choice.

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