On May 22, 2023, Douglas Herrington, CEO Worldwide Amazon Stores, sold 9,472 shares of Amazon.com Inc (AMZN, Financial) at a price of $115.56 per share. This transaction comes as part of a series of insider sell activities by Herrington over the past year, during which he has sold a total of 79,270 shares and purchased none.
Who is Douglas Herrington?
Douglas Herrington is the CEO Worldwide Amazon Stores at Amazon.com Inc. He has been with the company for several years and has played a significant role in the growth and expansion of Amazon's global retail operations. Herrington's insider trading activities provide valuable insights into the company's performance and future prospects.
Amazon.com Inc's Business Description
Amazon.com Inc is a multinational technology company based in Seattle, Washington. It focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. Amazon is one of the world's largest online retailers and a prominent cloud services provider. The company was founded by Jeff Bezos in 1994 and has since grown to become a global powerhouse, offering a wide range of products and services to customers around the world.
Insider Buy/Sell Analysis and Relationship with Stock Price
Over the past year, there have been no insider buys for Amazon.com Inc, while there have been 42 insider sells. This trend suggests that insiders may be taking advantage of the stock's current valuation to realize gains on their investments. However, it is essential to consider the context of these transactions and the overall market conditions before drawing any conclusions.
On the day of Douglas Herrington's recent sell, Amazon.com Inc's shares were trading at $115.56, giving the stock a market cap of $1,179,940.674 million. The price-earnings ratio is 273.81, which is higher than the industry median of 15.9 and higher than the company's historical median price-earnings ratio. This indicates that the stock may be overvalued compared to its peers and historical performance.
However, with a price of $115.56 and a GuruFocus Value of $199.01, Amazon.com Inc has a price-to-GF-Value ratio of 0.58. This means the stock is significantly undervalued based on its GF Value. The GF Value is an intrinsic value estimate developed by GuruFocus, calculated using historical multiples, a GuruFocus adjustment factor, and future estimates of business performance from Morningstar analysts.
Conclusion
While the recent insider sell activity by Douglas Herrington and other insiders at Amazon.com Inc may raise concerns for some investors, it is essential to consider the broader context and the company's valuation. The stock appears to be overvalued based on its price-earnings ratio compared to the industry median and its historical performance. However, the price-to-GF-Value ratio suggests that the stock is significantly undervalued.
Investors should carefully analyze the company's financial performance, growth prospects, and overall market conditions before making any investment decisions. It is also crucial to monitor insider trading activities, as they can provide valuable insights into the company's performance and the insiders' confidence in its future prospects.
