Amid a soft session on Wall Street Thursday, Nvidia (NASDAQ:NVDA) dubiously distinguished itself, dipping steeper than the benchmark equity indices. Raising eyebrows among stakeholders is insider transaction disclosures, specifically involving Nvidia Director Mark Stevens. Historically, Stevens has demonstrated pensive trading behaviors with NVDA stock, implying his concerns about broader economic viability. Still, insider trading ultimately represents speculation so investors must take the assessment with a grain of salt.
According to data from Finviz, Stevens disclosed four transactions this month — all of them sales. Starting from a transaction date (which differs from the filing date) of Jan. 9 and ending on Jan. 13, the director sold a total of 275,000 shares.
Further, it’s not just about the number of shares of NVDA stock sold. Rather, it’s the sudden spike in transaction count. In December, Stevens only incurred one transaction, a sale of 60,000 shares. Overall, in 2022, the director sold 738,150 shares.
Intuitively, the insider’s accelerated sales of shares owned seemingly bodes poorly for NVDA stock. After all, when insiders buy shares, the principles of economic rationality dictate that only one core reason exists: they believe said securities will rise in value. However, the inverse assumption — that insiders sell because shares will erode — doesn’t always ring true.
Fundamentally, it’s impossible to know exactly the motivations of any transaction. For sales, the water becomes further muddied. Primarily, because stocks depend on market valuations, holding too much wealth in them presents major risks. Therefore, the sale of NVDA stock could simply be a matter of prudence rather than a premonition.
Playing Detective for NVDA Stock
While no one can say with absolute authority — other than the party itself — why insider selling occurred, such disclosures still carry relevance. Specifically for NVDA stock, investors can analyze Stevens’ prior trading behaviors.
Per Finviz, the director’s first insider sale occurred on Nov. 23, 2015. Prior to the coronavirus pandemic, Stevens only posted a total of four selling transactions. However, the red-ink fireworks truly exploded when Covid-19 initially capsized the global economy.
Just in April 2020, Stevens disclosed five insider sells, totaling 121,125 shares of NVDA stock. From that point on, the director continued to sell shares that year up until July 2. Across the subsequent four transactions, Stevens sold 79,381 shares.
However, from that July date, Stevens held on until the next insider sale of 58,000 shares on Nov. 22, 2021. Recall that from early July 2020 to roughly the back half of November 2021, NVDA stock tripled in value. Of course, it was also in November 2021 that the cryptocurrency market crashed, hurting Nvidia’s mining-centric processors.
It’s speculation but Stevens may have sensed trouble brewing, thus exiting at the first opportunity. Later, when geopolitical flashpoints erupted and inflationary pressures squeezed Nvidia’s customers, the director continued dumping NVDA stock.
Why It Matters
Another inference regarding Stevens’ insider transactions could be that the director may be too pensive. For instance, the director could have accrued exponentially more wealth with a bit more confidence and patience. Thus, some investors may treat the insider dumping as a bullish signal for NVDA stock.
Again, it’s impossible to know for sure. For absolute facts, data from TipRanks reveals that NVDA stock carries a moderate buy consensus view, breaking down as 21 buys, five holds and one sell. The average expert price target stands at $203.24, implying a nearly 20% upside from the time-of-writing price.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.