What happened

Shares of artificial intelligence company C3.ai (AI 3.02%) slipped a modest 2.8% through 3:03 p.m. ET on Wednesday.

You can thank the company's own executives and directors for this.

So what

As TheFly.com pointed out last night, C3 Board of Directors member Richard Levin sold 12,000 shares of C3 stock on July 7, collecting $504,000 on the sale -- but that's not the only reason this sale might worry investors.  

Turns out, all 12,000 of the shares in question were acquired by Mr. Levin through the exercise of stock-option grants over the last couple of months. What's more, over the past three months, the director sold even more shares -- 24,000 more shares worth $726,240.

Nor is Levin the only C3 insider selling. Other filings with the Securities and Exchange Commission (SEC) show:

  • CFO Juho Parkkinen selling off 4,220 shares worth $152,426.
  • CTO Edward Abbo collecting $15.1 million for the sale of 457,585 shares.
  • And Executive VP Houman Behzadi selling 948,883 shares for $35.5 million.

And all that happened in just the last week of June.

Now what

Granted, we still believe that insider buying is much more informative for investors than insider selling, because insiders may decide to sell shares for many reasons (to pay income taxes, to offset income taxes from stock-option grants, to raise cash to buy a house, for example) and not just because they foresee bad news coming down the pike. Still, a string of stock sales like those listed above may give other investors pause.

When these sales take place at a company like C3.ai, moreover -- a company with more than a quarter billion in annual sales but no profits or free cash flow whatsoever -- you can hardly blame investors for getting just a wee bit nervous when they see a long line of insiders selling a stock and themselves left holding the bag.

On the plus side, in just six weeks, on Aug. 29, C3.ai is due to release its next earnings report and will have a chance to dispel investor worries about its financial health.

Fingers crossed for some good news.