The stock market is starting December on a bullish note, and so is the stock of electric vehicle (EV) battery maker QuantumScape (QS 5.69%). Today's jump of 6.2% as of 2:50 p.m. ET tops off a big week for QuantumScape shares.
Yet those gains are coming after an avalanche of stock sales by QuantumScape officers.
Insiders have been selling
QuantumScape reported its third-quarter results on Oct. 25. When the window for insiders reopened after that announcement, there has been a flood of selling by QuantumScape officers between Nov. 8 and Nov. 29.
Sales have come from a full slate of QuantumScape officers. They include:
- Co-founder and CEO Jagdeep Singh
- President Siva Sivaram
- Co-founder and chief technology officer Tim Holme
- Chief development officer Mohit Singh
- Chief financial officer Kevin Hettrich
- Chief legal officer Michael McCarthy
Insider sales aren't always a signal
However, smart investors know there can be many reasons why company insiders sell shares. QuantumScape shares have dropped more than 50% since the start of August. The slate of insider sales could be happening for personal tax reasons or portfolio positioning.
Singh sold nearly 200,000 shares of his stock worth more than $1 million, and McCarthy sold about $500,000 worth of QuantumScape stock. But digging deeper into each of the Securities and Exchange Commission (SEC) filings for those sales shows they were all done with vested restricted stock awards.
Taxes on that type of compensation are triggered once that equity has vested. So it's possible, and perhaps likely, that the officers have sold shares to help cover taxes that will be owed for the current tax year.
That reality should give any panicky investors cause for relief. That likely is helping the stock regain momentum after it drifted lower throughout much of November.
