The CEO of Volvo Car AB Just Bought $900K Worth of Stock

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C-suite executives tend to have a good understanding of their companies’ prospects. If they’re buying company stock, it’s a sign that they’re confident about the future and that they expect to see the company’s share price move higher.

In this report, we are going to highlight a large CEO purchase at Volvo Car AB (VOLCARB:SS). Volvo Car is a leading automotive company. Focused on premium vehicles, it manufactures SUVs, station wagons, and sedans, with an increasing focus on electric vehicles (EVs). The company is listed on the Stockholm Stock Exchange and currently has a market cap of around SEK 112.71 billion.

Insider Buying at Volvo Car

2iQ’s data shows that on May 16, CEO and President Jim Rowan purchased 252,000 shares at a price of SEK 37.28 per share. This trade cost the insider SEK 9.39 million (approx. USD $902,000) and increased his holding to 403,000 shares.

High-conviction Purchase

This trading activity is worth highlighting for a couple of reasons.

Firstly, the trade has increased the size of Mr. Rowan’s holding by around 167%. The fact that the insider has upped his stake by such a large percentage suggests that he is very confident the stock is set to move higher.

Secondly, this trade represents the largest purchase from an insider at Volvo Car since the company’s Initial Public Offering (IPO) in October 2021.

Strong Start to the Year

Volvo Car recently posted a solid set of Q1 results.

For the period, revenue came in at SEK 95.7 billion, compared to SEK 74.3 billion a year earlier. Meanwhile, operating income was SEK 5.1 billion – well ahead of the consensus forecast of SEK 3.6 billion. The company cited strong retail sales, increased price realization per car, favorable geographical mix, and cost cutting for the solid performance.

"We have started 2023 on a stable note, continuing to deliver on our ongoing transformation with increased revenues and core profits in the first quarter," said Mr. Rowan. "With this performance we’ve laid a strong foundation for the rest of 2023, but we remain ever vigilant amidst the continued turbulence around the world. Our focus is on execution,” he added. 

Looking ahead, the company kept its outlook for "solid double-digit growth" in 2023 retail sales. It added that it expects to see a positive effect from lower lithium prices from Q3.

In light of these results, we see the insider buying here as a bullish development.