Cedears: Jeff Bezos has already sold Amazon shares worth US$10 billion, what is the impact?

He Amazon founder Jeff Bezos broke away from 403,974 shares from your company for an approximate value of US$80.8 million in the last few hours. Thus, so far this year, the tycoon has sold papers for an amount close to US$10.250 millionaccording to the latest available data, which has caused a spike on Wall Street A warning sign of possible insider trading by the e-commerce giant’s insiders and, therefore, in the holders of Cedears.

It happens that the shares of the big technology companies known as the “Magnificent Seven”among which is Amazonhad an excellent performance in the middle of 2024. Bezos’ firm rose almost 30% in that period, according to data from S&P Global Market Intelligence. And, together with Alphabet and Meta PlatformsAmazon is a major player in the digital advertising business, which experienced a strong recovery in the first half of the year as the US economy remains robust.

Another common feature is that each is investing in new generative artificial intelligence capabilities. (AI), which continues to attract the attention of investors.

In the case of Amazon, the company was able to accelerate its revenue in its earnings reports for the fourth quarter of 2023 and the first quarter of 2024. It achieved 13% growth in each of the aforementioned periods, compared to 12% and 11% it had posted in the same periods of the previous year. Thus, in the midst of a correction that extends to the last five days and taking advantage of the pause that the company is takingBezos and other “insiders” take profits at a very good price per share (approximately US$200), but What do these moves on the part of a CEO mean?

What is the “inside transactions ratio”?

Ignacio Murua, strategist of Quicktradeshare with Ambit that the “insider transactions ratio” is the index that measures the purchases and sales made by key personnel of public companies.

Murua explains that, for a few days now, The indicator returned to bearish territorymeaning that more insiders are selling shares than buying them, just as is the case with Bezos. The relevance of this index is quite intuitive, since “Who better than the person who runs a company to know when to buy and when to sell?‘?”.

However, the analyst suggests that other points must also be taken into account when understanding this information, such as, that a large part of the assets of these people are in shares of the companies they run or founded, so sales are also, all in all, “normal“.

However, Murua does not fail to point out that the current market situation has already shown “More than one warning about the valuation of companies, especially those in the technology sector”. Let us remember that The S&P500 is trading at more than 21x expected 2025 earnings, a ratio that is well above the historical average.

“Although we are still far from the prices that could reflect a bubble, We understand that a rotation of portfolios towards the most defensive sectors “The economic outlook seems to be the most reasonable,” says the strategist. He maintains that “last week, the market seems to have started to make these moves, with the utilities sector being the weekly winner.”

Cedears: be alert to the signs

It is always interesting to analyze What are the directors of a company doing with their shareholdings?since “insiders” are individuals who have access to confidential and non-public information about the company, in this case Amazon. This includes directors, executives, senior employees and other people who may consult other types of data due to their position within the firm.

Comparative table 6 months AMZ, GOOG and META.png

As well explained Gustavo Neffaa partner at Research for Traders, in dialogue with this medium, when stock prices are high, management, major shareholders, directors and company owners They usually sell shares. And when they are low, they buy back.

The analyst explains that this “is a highly valued insight and that it must be reported to the United States Securities and Exchange Commission (SEC). And the fact that a director or a shareholder sells part of the holding is something that the markets have to know. In fact, in this case, the sale by “insiders” is strongly controlled and subject to harsh sanctions if it is detected that They were made with privileged information.

Cedears: Ignoring the alarm bells

For Neffa, Maybe it’s just Jeff Bezos getting rid of some of his investmentIt turns out that in a company where the market capitalization is over US$2 trillion, “It’s not that these movements are irrelevant, but they go almost unnoticed.“What the analyst means is that insider sales are much more important when they occur, for example, in smaller companies, whose objectives are unknown.

This is not the case with Amazon, because “We all know where this is going“. Neffa argues that Bezos’s company is a consolidated company that is growing very healthily in the cloud segment and its foray into artificial intelligence makes the sale of shares by its CEO No be a warning sign for investors.

Neffa analyzes that perhaps Bezos’s sale is due to the fact that he wants to give himself a better life or that he has other businesses in which he is investing, but “It’s not necessarily something that has to be taken into account as Bezos is selling because the prices are crazy.or they are in a bubble. I do not subscribe to that view. Therefore, I am partially reducing the relevance of that information,” he concludes.

In this way, the analysts consulted by this medium Amazon investors dismiss red flagsalthough it is not a bad idea to closely monitor this type of operation by managers, since the market in general does not look favorably on “insiders” making large sales; Not because there are events coming that will alter the share price, but mainly because the interpretation is that it is a good price to get out of that paper.especially at times when the market, and the technology sector in particular, seems exhausted.