The market may be sinking lower today, but that hasn't stopped the Afterpay Touch Group Ltd (ASX: APT) share price from pushing higher.
In late morning trade the payment solutions company's shares are up 3.5% to $7.28.
Why are Afterpay Touch's shares on the rise today?
This morning the company confirmed that executive directors Anthony Eisen, Nicholas Molnar, and David Hancock have each sold shares off-market this week.
According to the release, the transactions were in accordance with its previous announcement and were done for asset diversification reasons.
Eisen and Molnar have each sold 10% of their stake or 2.5 million shares off-market for a consideration of $6.94 per share or approximately $17.3 million in total. Neither have plans to sell any further shares over the next 12 months.
Hancock has offloaded 500,000 shares or 21% of his holding at an estimated $6.94 per share.
The transaction, which was approved by the independent board of directors, was undertaken by way of an off-market bookbuild to institutional and professional investors. No further details on their identities have been provided.
Should you invest?
While insider selling rarely goes down well with the market, I think this selling is entirely understandable. Furthermore, the price that the transactions took place at was less than 1.5% below the last close price.
Like I said yesterday with WiseTech Global Ltd (ASX: WTC) and its $100 million institutional share issue, I think this transaction should support its share price.
If institutional investors are willing to purchase a significant number of shares at this level, it's safe to say they are confident that the risk/reward on offer is sufficient.
And with the company recently launching in the U.S. market, they might be right to think that way.
The size of the U.S. online retail market is significantly bigger than in Australia. So if the Afterpay platform resonates well with U.S. consumers, the company could be on the verge of seeing its sales growth accelerate again.
While Afterpay Touch does carry significant risk due to its premium valuation, I remain confident that in the long-term shareholders will be rewarded.
