The most profitable insider transactions tend to occur in small-cap stocks. In this segment of the market, companies are less researched meaning there’s more potential for large share price movements.
In this report, we are going to highlight some interesting insider buying in a US small-cap stock, Shift Technologies Inc (SFT:US). Shift is a technology company that offers an automotive e-commerce platform. Its mission is to improve the car purchase process. It is listed on the NASDAQ Capital Market and currently has a market capitalization of $738 million.
Shift Technologies: insider buying
Our records show that since 18 November, three insiders at Shift Technologies have purchased stock. On 18 November, Director Victoria McInnis purchased 15,000 shares at a price of $6.72 per share. Then, on 23 November, Co-CEO George Arison purchased 15,000 shares at a price of $6.72 per share. Finally, on 25 November, COO Sean Foy purchased 12,500 shares at a price of $8.10 per share. Combined, these insiders spent over $300,000 on SFT stock.
This insider activity is significant for a few reasons. Firstly, the cluster of buying shows that there is a consensus of opinion that Shift Technologies stock is undervalued right now.
Secondly, two of these insiders are top-level executives. Co-CEO George Arison founded Shift in 2013. Meanwhile, COO Foy – who previously held senior positions at Amazon – has been at Shift since 2018. It’s likely that these insiders have a good read on the company’s performance and future prospects.
Shift posted an excellent set of third-quarter results on 12 November. For the quarter, total revenue was up 31% year-over-year and up 85% on Q2 2020 to a record $59.9 million. Non-GAAP adjusted gross profit was up 156% to $3.9 million. Total units sold were 4,046, up 34%.
Looking ahead to Q4, the company said that it expects to generate record revenues of between $72 million and $75 million, representing 163% to 174% year-over-year growth, the strongest revenue growth in the company’s recent history.
“Our third quarter, and year-to-date results demonstrate that there is a clear demand for our offerings and consumers are embracing Shift more than ever before,” commented Co-CEO George Arison.
Meanwhile, Co-CEO Toby Russell said: “This has been a transformative year for Shift and we are embarking on our life as a public company with exciting momentum. I couldn’t be more excited for the future of Shift.”
In light of these strong results, and very confident tone from management, we see the insider buying here as a bullish signal.