Should You Worry When Insiders Sell Their Shares? Here’s How To Find Out | Global News Avenue

As Tesla, Inc. (TSLA) stocks fell nearly 50% from their peak in mid-December 2025, with board members and board members of Elon Musk’s Company and an executive who sold more than $118 million and profited about $100 million. The sell-off raises the question: When should investors worry about insiders selling the stocks they own?

“If executives sell their plans six, nine or 12 months ago under the plan, it’s fundamentally different from open sales that are not part of the plan,” said George Pilkes, macro analyst at Custom Investment Group.

Pilkes stressed Rule 10B5-1 Trading plans, an arrangement approved by the Securities and Exchange Commission (SEC) allow company insiders to arrange future stock transactions in advance. The plans set up legal shields for executives who may face scrutiny or internal transaction allegations.

While some Tesla insiders’ sales were made under these pre-designs, others were not, and coincided with Tesla’s biggest single-day decline in five years, attracting attention. Below, we take you through what company leaders should pay attention to when starting a stock sale and when those sales should (or shouldn’t) worry you.

Why insiders sell their stocks

When a company insider sells company shares, it is not necessarily a sign of trouble.

“It’s important to understand the nuances,” Pilkes said. “Is the sales of (selling) stocks pre-planned? How much is the sales relative to insiders? Have they sold stocks consistently throughout history?”

The way executives get compensated in most publicly traded companies means that most of them are equity. Therefore, many executives with wealth in a single company stock want diversification Their portfolio.

Common reasons for insider sales include the following:

• Pay tax on vested stock options
• Major personal expenses such as buying a house or funding children’s education
• Portfolio rebalancing diversification
• Retirement Plan

“The best case for sales is that it’s a person who owns a relatively large stake, they get a lot of compensation in the stock and they have 10B5 sales to get some liquidity, but they don’t really sell that much.”

In the case of Tesla, board member James Murdoch sold $13 million in March 2025 (see below) from exercising stock options that will expire in 2025.

Red flag: When internal sales are related

Although many internal sales are routine, some models should attract investors’ attention.

“The worst case scenario is when insiders are starting to sell quickly, with a lot of sales relative to what they have, and in relatively short notices,” Pilkes said.

This may mean that they share undisclosed knowledge of adverse developments. Other worrying patterns include the following:

• For sale by insiders Facing optimistic public statements
• An unusually large number of sales represent the majority of their holdings
• Sales occurring outside the normal company transaction window
• Cancel the 10B5-1 plan, then the new sales

Where to find internal transaction information

The main source of investors is SEC Table 4, and insiders must submit within two working days of any transaction. These forms are available through SEC Edgar Database.

Recent SEC rule changes now require a checkbox on Table 4 to clearly reveal when to trade under the 10B5-1 plan. That’s where you want to see first.

Other useful resources include the company’s investor relations website and financial news services that track internal transactions.

Bottom line

When a company leader sells its shares, the context is more important than the headlines. Insiders’ arrangements for sales through the planned 10B5-1 often represent normal portfolio management rather than a vote without confidence. However, when multiple insiders conduct large, unplanned sales (especially during the company’s challenging times), you should pay attention and review your holdings.