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Afterpay share price tumbles on insider selling news

The Afterpay Touch Group Ltd (ASX: APT) share price has uncharacteristically been one of the worst performers on the ASX 200 on Thursday.

The payments company’s shares have fallen 3% to $18.96 even though the market has pushed higher again today.

Despite this decline the Afterpay Touch share price is up a massive 54% since the start of the year and 148% since this time last year.

Why is its share price dropping lower today?

Investors may be responding negatively to a change of director’s interest notice which was released after the market close on Wednesday.

According to the notice, the company’s independent non-executive director, Clifford Rosenberg, has offloaded a sizeable number of shares through on-market trades this month.

The former LinkedIn senior executive sold 150,000 Afterpay Touch shares through a series of on-market trades between March 1 and March 5. Mr Rosenberg received a total of $2,969,439.97 for the shares, excluding brokerage costs.

Insider selling will more often than not spook investors and lead to fears that its shares have peaked.

However, the selling of shares by directors can be for numerous reasons. Sometimes it is done for tax purposes, diversification, or to fund the purchase of something such as a new home. Unfortunately, no reason was given for this selling, but Mr Rosenberg still has a considerable holding, so I don’t believe it was done out of fear that its shares have peaked.

The notice reveals that the director still owns 650,574 shares and has 700,000 unlisted options exercisable at 20 cents per option and 200,000 unlisted options exercisable at $1.00 per option.

Should you buy the dip?

If you have a high tolerance for risk and are happy to hold onto its shares for the long term, then I think it would be well worth snapping up shares on this weakness.

I think Afterpay Touch has an incredibly positive long-term outlook, making it a great buy and hold option along with fellow tech stars Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX).

In addition to those shares, I think these top growth shares would be great investments right now.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO, Altium, and Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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