Zip Co Ltd (ASX: Z1P) shares have been struggling in recent months. The Aussie buy now, pay later (BNPL) company’s value is down more than 20% in the last 6 months and 5% in the last month alone.
Investors may be curious who is riding the highs and lows of share ownership in the Aussie company. Here’s a look at what company insiders are doing with their Zip shares right now.
Why does it matter?
Insider ownership may not seem like such a big deal to your average investor. However, it can be a really powerful indicator of support for the company’s future prospects.
Insiders such as the executive team (CEO, CFO etc) and board often own a stake in the company. That’s because it helps with compensation, but also with aligning incentives. After all, the board represents the interests of the company’s shareholders who own the shares themselves.
Ensuring a significant portion of an executive’s pay packet is tied up in shares or options also incentivises those individuals to boost the share price, which is what shareholders want.
That’s enough about the why, let’s take a look at how insider ownership looks with Zip shares.
How many Zip shares are owned by insiders?
Notably, founder and CEO Larry Diamond sold $13.77 million worth of Zip shares back on 15 April. Co-founder and COO Peter Gray also sold down $4.59 million worth of company shares on the same date.
Interestingly, that coincided with the start of a 30% decline in the Zip share price through to mid-May 2021.
It must be said that director share sales have been few and far between in recent times. That has been reflected with strong recent gains for the Aussie BNPL powerhouse. Zip shares have climbed 20.2% higher year to date and a whopping 833% in the past 5 years.
The recent sales by Mr Diamond and Mr Gray doesn’t mean that they have lost faith in Zip. Founders sell down for a variety of reasons such as liquidity and the recent sales represent a small portion of shares owned by the two.
In fact, Diamond Venture Holdings Pty Ltd is still the company’s top shareholder with a 10.99% stake while Mr Gray maintains a 3.09% stake and is within the top 10 investors.