Key Points
- Insiders are selling AppLovin, but investors should stay the course while analysts lead the market higher.
- Carvana insiders sell large amounts of stock, but no red flags are raised: analysts are leading this market higher.
- Datadog insiders sell stock, and sales are consistent with share-based compensation; analysts see the stock rising by 15%.
For two reasons, insiders sell tech stocks like AppLovin (NASDAQ: APP), Carvana (NYSE: CVNA), and DataDog (NASDAQ: DDOG). First, they receive share-based compensation as part of their packages and need to make periodic sales to take profits and cover taxes. There is nothing to harm investor value in that. The second is that share prices for their company stocks are increasing. If anything (other than bad news) can spur an insider to sell, it is higher share prices and the realization of value gains. The takeaway for investors is that these stocks are on the rise due to factors like performance results, positive future outlooks, analyst ratings, and anticipated further gains.
AppLovin Corporation Insiders Sell: Institutions Buy
AppLovin Corporation insiders have periodically sold shares over the last few years, but their activity spiked in Q2, raising a red flag. While various insiders are selling, the bulk of sales are from KKR (NYSE: KKR), an early investor. KKR’s transaction included converting Class B into Class A shares, resulting in the sale of 17.5 million class shares, netting more than $1 billion across the several entities involved. The takeaway for investors is that KKR’s 10% ownership status is no longer valid, and shares of AppLovin remain tightly held. Insiders, including large shareholders, own about 15% of the stock, and institutional involvement is growing.
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Institutional interest in AppLovin is still low and less than 50% of the float, but it is growing. Institutions bought on balance in the first half, with activity spiking in Q2, consistent with the April and June pullbacks in price action. Their activity is supporting the uptrend while analysts lead the market higher. Eighteen analysts rate this tech stock, and the consensus is a Moderate Buy rating. The price target lags the action but is up about 200% since last year, trending higher, and recent activity puts the market in the range of $90 to $105 or 10% to 30% upside.
The reason for the upswing in sentiment is results. The company emerged from a business contraction last year, sustaining acceleration sequentially into Q1 this year. The strength is expected to persist this year because the guidance is strong; guidance may be cautious given the forecast for market share expansion. AppLovin is monetizing AI for its clients.
Carvana Has Tailwinds to Drive Its Share Price Higher
Carvana insider activity is consistent with share-based compensation except for the sales by Ernest C. Garcia II. He has made numerous sales this year, trimming his position significantly and raising a potential red flag. However, that red flag is mitigated by his support for the stock in 2022 and the profits made since—he, along with his son, Carvana CEO Ernest C. Garcia II, sank tremendous amounts of personal capital into the stock when it was at its lowest.
Now, with business conditions stabilizing, growth and profits are back in the picture. Growth and profits support a higher share price, providing an attractive exit. Even so, insiders and significant shareholders own 17% of the stock and support the business considerably. Conversely, institutions have bought on balance in 2024. Their activity also supports the market for this stock, which analysts are leading higher. A significant shift in analysts’ sentiment began in February, including upgrades and price target revisions that have sentiment and price targets rising. The sentiment is at Strong Hold, near Moderate Buy, from Reduce, and the price target, which lags price action, is up 150% in the last year; the fresh targets imply a 25% upside is possible.
Datadog Led Higher by Analysts Despite Insider Selling
Datadog insiders are selling, but no red flags are present. Their sales are small and periodic, aligning with expectations, and there was no spike in Q2. Insiders and large shareholders still own about 12% of the stock, providing a solid support base. That base is compounded by robust institutional interest. Institutional activity has been mixed in 2024 but ownership is strong at 78% of the stock, and activity is bullish in Q3. Analysts are notably bullish on the stock, with thirty-three rating it a consensus Moderate Buy with a price target of $138. The $138 target is rising compared to last month, last quarter, and last year, assuming a 15% upside for investors.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|---|---|---|---|---|---|
| KKR & Co. Inc. (KKR) | $115.73 | -1.9% | 0.60% | 25.95 | Moderate Buy | $101.20 |
| Carvana (CVNA) | $123.41 | -4.4% | N/A | 54.13 | Hold | $100.93 |
| AppLovin (APP) | $78.68 | -6.1% | N/A | 46.83 | Moderate Buy | $71.72 |
| Datadog (DDOG) | $117.32 | -4.8% | N/A | 366.63 | Moderate Buy | $138.21 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.