Silicon Valley Executives Are Cashing Out Shares

Tech leaders are getting out while the getting’s good.

As the artificial intelligence hype cycle rockets massive tech companies to all-time high share prices, Silicon Valley’s founder and executive classes are beginning to cash out at the highest rate in years, per a Financial Times analysis published over the weekend. But is it a signal that the market is nearing its peak?

View From the Top

Meta, Amazon, Microsoft, and Alphabet are trading at or near all-time highs. And that momentum has even revivified the listless IPO market. On Friday, social media company Reddit finally made its long-anticipated debut, with its stock ending its first day of trading up nearly 50% — a rise fueled in part by various deals the company has made to cement its place in the generative AI ecosystem. Chipmaker Astera Labs, another obvious beneficiary of AI optimism, also flourished in its market debut last week, with its shares nearly doubling in their first few days on the market.

But the bull market has also coincided with a spate of serious insider selling. And while insider selling is typical in the early months of the year, the ratio of insider selling to insider buying has hit its highest point since the first quarter of 2021, according to data from insider trading disclosure-tracking firm Verity LLC seen by the FT. Some of the industry’s biggest names are leading the charge:

• Peter Thiel has sold $175 million worth of shares of Palantir, the data analytics firm he co-founded, per regulatory disclosures — good for his biggest sale in three years. Meanwhile, his old protégé Mark Zuckerberg sold $135 million worth of Meta shares in February, marking his biggest sale since November 2021 — or the most recent market crest.
• Over at Amazon, Jeff Bezos has cashed out a whopping $8.5 billion worth of shares so far this year, though the timing is likely at least in part due to Bezos finally completing his move to the tax-friendly state of Florida. His CEO successor, Andy Jassy, has sold about $21 million worth of shares so far this year, or about the equivalent of the past two years combined.

Pop Till You Drop: The widespread selloff raises an obvious question: Do tech execs believe they’re nearing a summit — and subsequent dropoff? “Insider sales by high-level execs of large amounts of stock are never a good sign, it’s quite simple,” Charles Elson, chair of corporate governance at the University of Delaware, told the FT. And while some see a bull market, others are beginning to see, well, you know… “The current AI bubble is bigger than the 1990s tech bubble,” Torsten Slok, chief economist at Apollo, wrote in a note to clients at the end of February. There it is — the dreaded B word.