12-month performance: +97% Insider activity: Bearish Selling pattern: Large sale from CEO and multiple Insiders Recent News: Poor Q2 results
STMicroelectronics is a semiconductor manufacturing company. It is a global leader in serving its customers with intelligent and energy-efficient products and solutions in the area of electronic applications. It is headquartered in Geneva, Switzerland and is listed on Euronext Paris and currently has market capitalisation of €26 billion.
STMicroelectronics has had a strong run as compared to the previous year as the stock price increased by approximately 95%. The Q2 results revealed a decline of 4% in sales - from $2.17 million to $2.08 million, moreover, net income also declined by 43% dropping to $90 million as compared to previous year. Similarly, EPS decreased by 44%, falling from 0.18 to 0.10. As per the Q2 report, this drop is due to the effect of COVID-19 hence fall in sales of automotive, analog and imaging products. According to annual reports, the company’s net revenues have reduced by 7% between 2010 and 2019.
Source: 2iQ Research
What stands out here is that STMicroelectronics President and CEO, Jean-Marc Chery offloaded a large amount of STM ADRs on 28 July, 2020. On stated date, he sold 80,000 STM ADRs, representing 80,000 ordinary shares, generating proceeds of $2.3 million. After this sale, his holding reduced by 99.6% which shows that Mr Chery is perhaps slightly pessimistic about STM stock at the moment. Similarly, Mr Chery has sold 42,000 ADRs, representing 42,000 ordinary shares, on 24 January 2020, after which share price fell from 27.75 to 13.96, i.e. 49% within 54 days of sell. Considering the large sale by Mr Chery, and the fact that the other five top-tier insiders offloaded nearly $6 million, of which $2.8 million relate to employee options, the insider activity is a strong bearish signal. Following, the recent insider activity and noticeable short selling activity by investment managers we believe caution is warranted towards STM stock right now.
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