On September 5, 2023, Evan Spiegel, CEO and 10% Owner of Snap Inc (SNAP, Financial), sold 150,000 shares of the company. This move is part of a trend for the insider, who over the past year has sold a total of 400,000 shares and purchased none.
Evan Spiegel is a co-founder of Snap Inc, the parent company of Snapchat, a popular social media platform. Under his leadership, Snap Inc has grown into a multi-billion dollar company, with a market cap of $15,359.875 million as of the date of the recent sale.
Snap Inc's primary business is the development and maintenance of Snapchat, a platform that allows users to send photos and videos that disappear after being viewed. The company also offers a variety of other products and services, including Spectacles, a hardware product that connects with Snapchat and captures video from a human perspective, and a suite of advertising tools for businesses.
The insider's recent sale comes at a time when Snap Inc's stock is trading at $10.34 per share, giving the company a market cap of $15.36 billion. This is significantly lower than the company's GuruFocus Value of $40.32 per share, suggesting that the stock may be undervalued.
The GF Value is a measure of intrinsic value developed by GuruFocus, based on historical multiples, a GuruFocus adjustment factor, and future business performance estimates. With a price-to-GF-Value ratio of 0.26, Snap Inc's stock is considered a possible value trap, indicating that investors should think twice before buying.
The insider's selling activity over the past year contrasts with the overall insider trend at Snap Inc. Over the past year, there have been 45 insider sells and no insider buys.
This trend of insider selling could be a cause for concern for potential investors. Insider selling can sometimes be an indicator that those with the most knowledge about the company's prospects are not confident in its future performance. However, it's also important to note that insiders may sell shares for reasons unrelated to the company's performance, such as personal financial planning needs.
In conclusion, while Snap Inc's stock appears to be undervalued based on its GF Value, the insider's recent sale and the overall trend of insider selling at the company suggest that potential investors should proceed with caution.
