Insiders who bought US$17m worth of Nikola Corporation (NASDAQ:NKLA) stock in the last year have seen some of their losses recouped as the stock gained 10% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled US$9.5m since the time of purchase.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Nikola

The Last 12 Months Of Insider Transactions At Nikola

Over the last year, we can see that the biggest insider purchase was by insider Trevor Milton for US$17m worth of shares, at about US$5.80 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$2.62). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Trevor Milton was the only individual insider to buy during the last year.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insiders At Nikola Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Nikola. Specifically, insiders ditched US$107k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership Of Nikola

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Nikola insiders own 14% of the company, worth about US$182m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Nikola Insiders?

Insiders haven't bought Nikola stock in the last three months, but there was some selling. In contrast, they appear keener if you look at the last twelve months. We are also comforted by the high levels of insider ownership. So the recent selling doesn't worry us. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Nikola. Case in point: We've spotted 5 warning signs for Nikola you should be aware of, and 1 of these is concerning.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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