The Dicker Data Ltd (ASX: DDR) share price has capitulated 19.5% in the past two trading days to end today at $12.96.
Just on Thursday last week, shares were trading above $16! What has happened?
DDR share price
Why is the Dicker Data share price sinking?
On Friday, the company announced that its Founder, Chairman and CEO David Dicker would be selling 2.74 million shares (for about $42 million).
These shares were sold to meet personal projects and represents approximately 1.6% of the shares in Dicker Data.
Dicker still owns 58 million shares (worth about $750 million) in the business equal to 33.6% of the entire company.
What kind of personal projects are we talking about?
Usually, CEO’s sell shares to splash out on a third Ferrari or new yacht. Others may opt for a house in The Hamptons or a villa off the coast of Mallorca.
David Dicker is a different kind of cat. He is passionate about motor racing.
He founded and owns Rodin Cars. Based in New Zealand, Rodin is trying to make racing cars faster than Formula 1.
The company is currently expanding its production facility to create its own engine in-house.
If you’re into motorsports, David Dicker, or both, be sure to check out the Rodin cars website.
Should I be worried about the sales?
In short – no.
Dicker still owns 33.6% of the entire company. A majority of his wealth is held within Dicker Data, and thus he remains strongly aligned with shareholders.
If that doesn’t reassure you, then know that Dicker doesn’t draw a salary as CEO. Instead, he opts to receive the quarterly dividend payments as income. This is one of the reasons Dicker Data is a great ASX dividend stock.
Moreover, Chief Operating Officer Vladimir Mitnovetski bought 17,788 shares on market today for an average price of around $12.82.
Any other reasons for the Dicker data share price fall?
The share price fall may not be entirely attributed to the director sale.
Dicker Data is trading on historical highs currently with a price to earnings ratio of 43.
Moreover, in its most recent update management noted supply issues resulting from the global chip shortage impacting inventory levels.
Final thoughts
There’s an old market adage that goes along the lines of… there are many possible reasons to sell a stock, but only one reason to buy.
Management and directors sell shares for several reasons. I think this case, David Dicker just wants to build a new toy car.
For more ASX tech share ideas, be sure to our the 3 ASX shares I’d buy today.
