If a CEO is buying company stock, it’s often worth investigating the stock further. CEOs tend to have an intimate understanding of their businesses and are usually way ahead of analysts and portfolio managers when it comes to revenue and earnings trends.
In this report, we are going to highlight a large CEO purchase at The Social Chain AG (PU11:GR). The Social Chain is a German social media company that is engaged in the development, creation, and scaling and social media brands. Its services include consultancy services, content production, data and insights, digital marketing, media sales, and influencer marketing services. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €497 million.
The Social Chain: Insider Buying
Our insider transaction data shows that on 18 June, The Social Chain’s Founder and CEO Wanja Oberhof bought 41,980 PU11 shares at a price of €26.20 per share. This purchase cost the insider approximately €1.1 million.
This trade stands out for two reasons. Firstly, it is substantial in size and shows a certain level of commitment from the insider. The fact that the CEO has spent over €1 million on stock suggests that he is bullish on its prospects.
Secondly, our data shows that Mr. Oberhof has made well-timed trades in the past. His last trade was on 30 March 2020 when he bought 74,000 PU11 shares at a price of €14.00 per share. Since then, the stock has risen by around 130%.
Good Start to 2021
The Social Chain has started 2021 well. In its first-quarter results, posted in mid-May, the company reported revenue of €70.4 million, up 41% year on year. Adjusted EBITDA came in at -€1.0 million, a significant improvement on the figure of -€3.4 million posted in Q1 2020.
Looking ahead, the company expects to continue growing at a rapid pace. For the second quarter of 2021, it expects to achieve revenue in excess of €100 million for the first time, along with a positive EBITDA figure. Meanwhile, for the year, it expects to generate revenue of between €320 to €350 million, representing organic growth of around 50%.
"Our growth strategy in Social Commerce remains sustainable. We will also grow strongly in the second quarter and are aiming for a quarterly revenue of around €100 million for the first time," said the CEO in the company’s Q1 results.
In light of this strong performance, we see the insider buying here as a bullish indicator.