SentinelOne Insider Trading Activity Suggests A Longer Slide

December 15, 2022 | Team

SentinelOne written on a balloon

Artificial intelligence cybersecurity SentinelOne, Inc. (NYSE:S) has experienced a downward trending stock price since late last year, with recent downturns coinciding with missed analyst expectations. Now, trading activity from top insider Tomer Weingarten suggests that this drift will not reverse course any time soon.

SentinelOne Background

SentinelOne is a cybersecurity company that uses AI to detect malware on laptops and mobile phones that access corporate networks. As of January 31, 2022, the company has 1,200 full-time employees in offices across the US, Europe, and Israel. Their main offering is the "Singularity XDR Platform", which is hosted on AWS and features three tiers. The Singularity platform has over 6,700 customers in 100 different countries. The company currently has a 4 billion dollar market cap.

Most recently, SentinelOne posted adjusted Non-GAAP net losses of 16 cents per share for the quarter ending October 31st, beating analysts' expectations of a 22 cent-per-share loss. 

SentinelOne went public in June of last year, opening trading at $46. The stock has experienced a steady decline since peaking in November 2021 and is now trading down at under $14 per share. The closing stock price since last year's IPO is shown below:

Graph showing the 5 year stock price for SentinelOne

SentinelOne Insider Trading

Let's now take a look at SentinelOne's insider activity. Trades from SentinelOne officers since the end of June last year are shown below:

Graph showing insider trades for SentinelOne officers

(Subscribers to the service, in addition to receiving our regularly updated aggregated insider trading analyses with our bottom-line takeaway, can easily recreate these charts for any public company and any combination of insiders to see what kind of insider activity is taking place at the companies in their portfolio.)

Bars coming down from the top represent insider sales while the red line shows the stock price. As indicated by the checkboxes above the chart, we are only examining trades made by SentinelOne officers. This is because of all insiders, officers tend to be the most informed and show the most profitable trading activity. Upon examining the graph, we notice large sales made in late September of last year, and dwindling selling following those trades until similarly large trades made very recently.

Let's now pivot to look only at the trades of president and CEO Tomer Weingarten. As the top insider of the firm, Mr. Weingarten's trades carry more weight than the rest of the officers. Insiders in his position typically trade more profitably as well. The trading activity of Mr. Weingarten only is shown below:

Graph showing insider trades for SentinelOne CEO Weingarten

By comparing with the previous image showing the trades of all officers, we can see that Mr. Weingarten's trading activity comprises a moderate amount of the late 2021 and early 2022 trading made by all officers, with Mr. Weingarten trading just over 100k shares in September 2021, compared with over 500k shares by all officers combined. However, Mr. Weingarten represents virtually all of the selling in December 2022, in the bars visible on the far right side of the chart. 

Between December 12th to 14th, Mr. Weingarten exercised options to acquire Class B shares, converted these shares to Class A shares (SentinelOne Class B shares are convertible to Class A shares at any time), and sold these Class A shares on the market. Mr. Weingarten sold 1.2 million shares on these three trading days, representing over $18.5 million in total value. Additionally, the shares sold on these days represent three times the amount of shares sold previously by Mr. Weingarten. Interestingly, these sales are accompanied by a footnote indicating that the sales "w[ere] effected in connection with year-end financial planning." The fact that a need is felt to explain these large sales is itself interesting.

With missed analyst expectations coinciding with a downward sliding stock price, unusually large sales by SentinelOne president and CEO send a concerning message to the market. We will be eager to see if these trades turn out to be an insignificant liquidity-related sale, or if they turn out to be a sign of the company's continuing woes. 

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Authors’ disclosure: This article expresses the authors’ opinions. None of the authors have any business relationship with the company whose stock is mentioned in this article. None of the authors have any stock or derivative position in the company mentioned in this article, nor any plan to open such a position within 72 hours. The article does not constitute any recommendation or advice as to whether any investment is suitable for any particular investor. Consult with your licensed financial advisor before making any investment decision.