NVDA sell-off alert? Insiders are leaving Nvidia at the “fastest pace in years”

Retail investors have played a key role in making semiconductor giant Nvidia (NASDAQ: NVDA) the most valuable company in the world by market capitalization.

But amid the rally, there are now signs of uncertainty about the sustainability of NVDA stock. Data points to a dramatic increase in retail investment inflows, while at the same time, insider selling activity has reached unprecedented levels.

In particular, a post shared by Market & Chaos A post by X on June 23 suggests that Nvidia insiders are dumping their shares at the “fastest pace in years,” raising questions about the stock’s future trajectory.

Notably, Nvidia insiders sold $796 million worth of NVDA stock in 2024 alone.

Nvidia’s conflicting insider sales and retail inflows

Nvidia’s daily retail receipts saw a significant upswing starting in early May 2024, peaking around the release of the company’s first quarterly report, with receipts rising to nearly $350 million in a single day. This sharp increase follows a period of relatively stable receipts between $0 and $150 million from February to April 2024.

The company reported revenue of $26.0 billion in the first quarter, up 18% from the previous quarter and 262% from a year ago. This appears to have been a key catalyst for this influx of private investment. At the same time, Nvidia’s recent 10-for-1 stock split made the equity available to a broad range of investors.

Contrary to retail investor optimism, Nvidia insiders, including top executives and directors, have been aggressively selling their shares. Those who have admitted to doing so include President and CEO Jensen Huang, CFO Colette Kress and several directors.

For example, in June, Huang sold over 120,000 shares in multiple transactions, totaling more than $15 million per transaction. Similarly, Kress sold over 10,000 shares, each worth millions of dollars.

The frequency and volume of these sales suggest that insiders may lack confidence in the stock’s continued upward momentum.

Overall, Nvidia’s strong market position could be driving enthusiasm among retail traders. On the other hand, aggressive insider selling could indicate that people with intimate knowledge of the company’s operations believe the stock is approaching or has already reached a peak.

This scenario could be a warning sign for retail investors. Insider selling is often considered a bearish indicator because it can indicate that those most familiar with the company’s prospects are trying to capitalize on currently high prices.

NVDA Stock Price Analysis

Meanwhile, Nvidia stock is facing short-term pessimism. At the close of trading on June 21, the stock was valued at $127, representing a 24-hour correction of over 4%. Nevertheless, the stock remains in positive territory, having gained over 160% since the beginning of the year.

In general, the stock is showing signs of a potential sell-off. As Finbold reported, Nvidia, for example, has consistently recorded a relative strength index (RSI) above 70, indicating a possible overbought scenario.

Finally, a crash in Nvidia could cause the stock to trigger the bursting of a bubble in the artificial intelligence (AI) space, as the company is a leader in the sector.

Disclaimer: The content of this website does not constitute investment advice. Investments are speculative. When you invest, your capital is at risk.