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Is Twitter Insider Selling Holding Back Its Recovery?

Twitter Inc. (NYSE: TWTR) has not been recovering with the rest of the bull market stocks since the sell-off ended in mid-October. It could be earnings and continued valuation concerns that are holding this social media giant back. It could even be that the doubters are simply winning over the Twitter bulls. Regardless of what the issue may be, if insider selling persists there could be a longer road to recovery than once thought.

24/7 Wall St. has tracked insider selling in many companies of late, and the selling in Twitter that has been revealed in recent days has been high. The one thing to consider is that these insider sales have been under 10b5-1 plans, so they are scheduled sales that will take place on a regular or semi-regular basis. Still, one has to wonder when they see insiders cashing out major dollars from their hot stocks.

A 10b5-1 plan enables an insider to establish a program to make transactions according to an advance plan. Such a program allows an insider to continue with planned transactions even if he or she comes into possession of material non-public information. These sales would also be considered volume weighted average price sales (VWAP) rather than single prints on the market.

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CEO Richard Costolo sold 141,730 shares for $41.10 per share, resulting in a total sale of $5.83 million. Costolo owns 36,028 shares directly and 283,460 shares indirectly.

Chairman of the Board Jack Dorsey sold 50,417 shares for $40.78 per share, resulting in a total sale of $2.06 million. He owns 22,152,601 shares indirectly.

Officer Adam Bain exercised an option on 39,020 shares priced at $0.85 per share, resulting in a total value of $32,972. Bain would sell these shares for $40.78 per share, resulting in a total sale of $1.59 million. He directly owns 19,972 shares and indirectly owns 100,000 shares.

Vice President Luca Baratta exercised an option on 5,210 shares worth $1.83 per share, resulting in a total value of $9,534. There was another sale of 3,466 shares for $41.43 per share, resulting in a total sale of $143,596.

There are other issues that may also be viewed with caution by shareholders. S&P gave it a mere junk bond rating recently. Was Twitter too rosy in its forecasts for years ahead?

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Shares of Twitter have fallen 29% to Wednesday’s close $39.71 from the high in October of $55.99. In Thursday’s trading, shares were up less than 1% to $40.00 in the last two hours of trading. The stock has a consensus analyst price target of $51.32 and a 52-week trading range of $29.51 to $74.73.