Why do insiders sell stock?

Insiders sell stock for many reasons, and a sale is not automatically a negative signal.

Common reasons include: - diversification - liquidity needs - tax planning - estate planning - scheduled sales under a Rule 10b5-1 plan - option exercises and related tax withholding - compensation-related portfolio rebalancing

Because insiders may sell for many non-bearish reasons, insider sales are generally harder to interpret than insider purchases. The most relevant questions are whether the sale was discretionary, whether it was open-market, whether it was large relative to the insider’s holdings, whether it was part of a pattern, and whether several insiders were selling at the same time.