A difficult week seems to be getting worse for restaurant technology producer Toast (NYSE:TOST). Indeed, shares are falling today on news that CEO Christopher Comparato has offloaded a large chunk of TOST stock. According to Seeking Alpha, the executive sold 58,000 shares at a price of $17.79 per share on Oct. 16.
This news comes amid an already fairly volatile month for the stock. Now, shares are trending downward as speculation mounts that the CEO is losing faith. Of course, the sale doesn’t represent Comparato’s entire TOST holdings and doesn’t necessarily mean he doubts Toast. But given the stock’s performance over the past month, it’s hard not to wonder whether darker days are ahead.
Should investors follow Comparato’s example and jump ship before TOST stock falls further? Let’s take a closer look.
What’s Happening With TOST Stock?
News of this sale has pushed TOST stock down today, ending an early-week rally. As of this writing, the stock is down nearly 3% for the day amid some volatility. This makes it difficult to pinpoint how shares will move from here, but when a CEO starts offloading shares, it’s hard for investors not to be concerned. Toast stock is also down more than 12% for the past one month, although it remains 2% in the green for the past six months.
All of this presents a picture of a stock with difficult-to-assess growth prospects. It also doesn’t help that Wall Street analysts appear somewhat split on TOST stock. Shares earn a consensus moderate buy rating on TipRanks based on seven buy ratings and seven holds. That said, Toast has also received several positive ratings this quarter — one upgrade from UBS and, more recently, a reiterated “buy” rating from Bank of America.
Still, even if institutional sentiment is improving, Comparato’s opinion on TOST may not be. As Gurufocus reports:
“Over the past year, [Comparato] has sold a total of 1,611,059 shares and purchased 0 shares. This recent sale of 58,000 shares is a continuation of this trend. The insider’s transactions provide valuable insights into the company’s financial health and future prospects.”
Gurufocus also notes that this recent sale isn’t an isolated incident. Over the past year, only one insider stock purchase has been recorded compared to 105 insider sales. That certainly isn’t encouraging, although TOST stock has managed to remain in the green by more than 2% year-to-date (YTD). At the very least, the stock has displayed enough stability to withstand a trend of consistent insider sales.
What Comes Next?
Investors should note that, while Comparato has sold a large amount of shares, he still holds 159,000 shares. With that in mind, the CEO clearly hasn’t given up on TOST altogether. Additionally, while the stock has struggled this year, the company has also given investors reason to believe in a potential turnaround. As InvestorPlace contributor Charles Munyi notes, Toast has displayed a clear focus on growth, adding 7,500 locations in the past quarter and bringing its total locations to 93,000.
Insider selling can be discouraging to see, but investors should take comfort in the fact that shares of Toast haven’t been pushed down too much. If market conditions shift soon, TOST stock could easily start growing again.
On the date of publication, Samuel O’Brient did not hold (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.
