An increasing number of the top tech companies’ Chief Executive Officers are showing increased insider stock selling activity. Available data shows that CEOs of five major tech companies have sold a staggering $6.36 billion worth of shares between January 1 and May 11, 2021.
Jeff Bezos is leading in that list after selling shares (NASDAQ: AMZN) worth $4.9 billion before his planned exit as Amazon’s CEO. Next in line is Facebook CEO Mark Zuckerberg who sold $1.2 billion worth of his stock. In general, the two executives have now offloaded $6.1 billion worth of shares from their respective firms.
On the other side, Nvidia CEO Huang Jen Hsun has offloaded $77.28 million worth of shares to take the third spot on the list. Nadella Satya, Microsoft chief executive, sold $65.44 million of stock (NASDAQ: MSFT), while Pichai Sundar of Alphabet let go of $33.05 million worth of stock.
Interestingly, among the top tech firms, only Tesla’s (NASDAQ: TSLA) Elon Musk and Apple’s Tim Cook have not offloaded any of their stock in 2021.
Why Are Zuckerberg And Bezos Leading In Selling Activity?
Bezos is holding the top spot fulfilling his 2017 commitment towards selling $1 billion of his Amazon stock annually. The funds he gets are part of funding his rocket firm Blue Origin. Additionally, the other money will be sent to his $10 billion Earth Fund to help in fighting the effects of climate change.
The Earth Fund will issue grants to scientists, activists, and many different environmental organizations. Bezos will join the Amazon board. However, he will be transitioning to manage his private ventures. Amazon unveiled in February 2021 that Bezos would become the firm’s board executive chair and in turn, step down as CEO by Q3 2021. Andy Jassy, Amazon Web Services head, will take over as the CEO.
The executives sell their shares for different reasons. However, charitable causes cut across most of them. In the case of Mark Zuckerberg, he committed in 2015 to give away 99% of his shares to various charity initiatives in his lifetime.
Alongside Dr. Priscilla Chan, his wife, they set up the Chan Zuckerberg Initiative to manage the money. The money goes to curing disease, personalized learning, connecting people, and creating strong communities.
These stock sales come in the wake of the tech stocks exploding to new highs amid the persistent COVID-19 pandemic. Amid the pandemic, with widespread lockdowns, the firms under the stewardship of these CEOs played an integral role by providing services and products to enable people to manage the effects of the current health crisis. The attention on these services pushed the stock prices to record highs.
Other Motivations For Insider Selling
These CEOs are also the top shareholders in their respective companies, hence contributing much to their net worth in general. Thus, some of the executives sell the stock aiming to diversify their wealth into other firms and entities.
Additionally, the latest selling might be motivated by tax reasons or the need to spend the value of stock holdings. Generally, despite selling the stock, these executives still hold lots of shares with no major impact on their cumulative net worth.
Even though insider stock sales appear to have become a common occurrence, they might eventually have an impact on the general market and investor sentiment. In many cases, where one executive shows increased selling activity but most of the others hold their shares, it does not call for any red flag.
It is worth noting that insider buying and selling activity is a critical indicator for the investors to project the future price movement of a stock. Investors follow these trends, considering that the stock sales information is available publicly.