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Insider trades provide investors with added context through which they can extrapolate conclusions about a stock’s near or medium-term outlook.  To use a simple hypothetical example, rarely would any trader enter a long position on a stock that’s significantly up if the members of the board are dumping inordinate numbers of shares. On September 23, data retrieved by Finbold’s SEC-verified insider stock trades signals revealed Tesla (NASDAQ: TSLA) chief financial officer (CFO) Vaibhav Taneja sold $2 million in Tesla stock. The transaction encompassed 8,000 shares, and the trade was executed at a price of $250. Why Tesla CFO’s stock selloff isn’t a bearish signal Earlier, we noted that insider trades provide added context — however, it is equally important to take into consideration the context surrounding the insider trade itself. Tesla’s CFO selling over $2 million in shares is not a bearish signal in the least — and here’s why. Taneja’s sale was conducted under a 10b5-1 trading plan. For readers unfamiliar with the term, a 10b5-1 trading plan is predetermined and planned well in advance, often months ahead of a sale, allowing insiders to avoid accusations of insider trading. In this particular case, the plan dates to May 1. Still, the CFO made a tidy profit — when the plan was put together, TSLA was trading at $179.99. At press time, the stock is trading at $256.11 — in other words, it has risen by 42.29% since May 1. To add further credence to this point, Taneja’s total amount of stock held has not actually changed — the CFO also exercised options contracts to acquire exactly 8,000 shares at a price of $18.22 apiece, for a total cost of $145,760. Tesla is on a bull run — impressive earnings are anticipated At press time, TSLA, although down 2.54% on…

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Filed under: News - @ September 27, 2024 1:26 pm