Intel's CEO Bought $9.7 Million of Stock Right After It Plunged 29%. I'm Not Ready to Follow Him In.
The chipmaker's CEO bought around $9.7 million of its stock in early November. Did his predecessors' buys pay off?
Intel CEO Lip-Bu Tan purchased 150,000 shares right after the stock dropped 29% on October 30th, investing around $9.7 million. This occurred one trading day following the company's announcement of a lower quarterly earnings guidance, $0.25 of non-GAAP earnings per share, down from $0.52 in the previous quarter. Over the past decade, Intel CEOs bought stock on the open market on 24 separate days with a year of trading history.
Of these, shares were higher on 12 occasions and lower on the remaining 12. The median outcome was a 2% decrease over a year, excluding dividends. However, Tan's purchase is notably larger, being nearly 20 times larger than Gelsinger's largest single-day buy and over six times Swan's biggest. Despite the significant size of Tan's purchase, the company's future remains uncertain due to weak PC demand and potential profit pressure for several quarters.
Currently, Intel's stock is not considered cheap, with a price-to-earnings ratio of around 35, compared to a decade's average of 20 times. Given these factors, the reporter does not intend to follow Tan's lead in buying more shares at the current price.
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