Founder of ASX tech company offloads shares worth $16 million after doubling in a year

Should investors be worried over this $16 million insider sale?

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When the founder of an ASX tech share sells out $15.9 million worth of stock, it's enough to make most investors sit up and pay attention. After all, shareholders usually like to see the managers of their company put their money where their mouths are and have as much skin in the game as possible. Plus, $15.9 million is no small chunk of change.

This is the situation facing investors of ASX tech share Megaport Ltd (ASX: MP1) today. So let's dig in and see if shareholders have anything to worry about.

Megaport founder unloads $16 million worth of stock

So Megaport released an ASX filing just this morning before market open. This filing showed that Megaport founder and non-executive chair Bevan Slattery disposed of 1,100,000 ordinary shares on 23 May last week in an on-market trade.

Yes, Slattery sold 1.1 million shares of Megaport last Thursday, collecting an average of $14.52 per share. That puts this sale at a value of $15.97 million.

It's arguably opportune timing for Slattery, as the stock price of this ASX tech share has exploded over the past 12 months. This time last year, Megaport shares were going for just $6.58 each, a far cry (120%) from the $14.50 the company is asking today.

Megaport stock has also climbed a whopping 57.8% over just 2024 to date. This ASX tech share is also up a whopping 252% from the $4-levels we saw in March 2023.

Check all of that out for yourself below:

It's not hard to see why Megaport shares have enjoyed such a lucrative run if we look at this ASX tech share's last earnings report, which was released back in February.

As we covered at the time, these earnings showed the company booking a 35% increase in revenues over the six months to 31 December to $95 million. Gross profits for the period came in at $67 million, a 43% rise over the previous half.

Megaport also reported record earnings before interest, taxes, depreciation and amortisation (EBITDA) of $30 million. That was up 785% from the previous half.

Should ASX tech investors be worried about this share sale?

But let's talk about whether investors in this ASX tech share have anything to worry about with last week's founder sale.

So yes, most investors like to see management align their own financial interests with those of shareholders as much as possible. As such, no one is going to welcome this sale. But management figures have their own finances to worry about.

Perhaps Slattery wants to buy a house, has a large tax bill, or wishes to invest in another venture. Perhaps he just wants to diversify his wealth away from his single largest holding, something that most financial experts would recommend anyone do.

So yes, Slattery did sell out a huge chunk of shares worth $16 million. However, the ASX filing shows that he still retains a massive stake in Megaport of 5,006,283 shares. This would be worth approximately $52.57 million today.

As such, we can't exactly argue that Slattery doesn't continue to have a vested interest in seeing Megaport succeed from here.

But at the end of the day, it's up to individual investors of this ASX tech share to determine whether this founder sale bothers them enough to change their minds about the company.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport. The Motley Fool Australia has recommended Megaport. 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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