TLDR
- Brad Smith, Microsoft’s Vice Chair and President, sold 38,500 shares for $19.97 million on Nov. 3.
- The sales occurred as Microsoft stock fell 5% following its earnings report due to AI spending worries.
- Microsoft beat Q1 expectations with $4.13 EPS and $77.67 billion revenue but capital spending reached $34.9 billion.
- Smith retains 461,596 shares worth approximately $237 million at current prices.
- The company increased its quarterly dividend to $0.91 per share, up from $0.83.
Brad Smith, Vice Chair and President of Microsoft, executed two stock sales on November 3. The transactions totaled nearly $20 million.
The first transaction involved 30,411 shares at an average price of $518.49. Smith then sold 8,089 additional shares at $519.21 each.
Combined, the sales generated approximately $19.97 million. Smith still holds 461,596 Microsoft shares worth over $237 million based on recent trading prices.
The stock has declined 5% since the company released quarterly results. Microsoft shares closed at $514.33 on Tuesday, down 1.4% following news of the insider sale.
Earnings Beat Fails to Prevent Selloff
Microsoft delivered first-quarter results that topped analyst forecasts. The tech company reported earnings of $4.13 per share, crushing the $3.65 consensus estimate.
Revenue came in at $77.67 billion, beating expectations of $75.49 billion. The company posted year-over-year revenue growth of 18.4%.
Microsoft achieved a return on equity of 33.47% with net margins at 35.71%. Despite these strong metrics, investors focused on rising costs.
Capital expenditures surged to $34.9 billion during the quarter. The figure exceeded analyst projections and raised questions about spending efficiency.
The company is pouring money into AI infrastructure and data centers. However, market sentiment has turned cautious on these massive investments.
Concerns about return on investment are spreading across the hyperscaler sector. The Nasdaq Composite dropped 2% on Tuesday, marking its steepest decline in weeks.
Dividend Hike and Analyst Targets
Microsoft raised its quarterly dividend to $0.91 per share. Shareholders of record on November 20 will receive the payment on December 11.
The new dividend represents a jump from the previous $0.83 quarterly payout. On an annualized basis, the dividend now totals $3.64, yielding 0.7%.
Wall Street analysts continue to back the stock. Microsoft holds an average “Buy” rating from 39 analysts covering the company.
Price targets range widely among firms. Wolfe Research set the highest objective at $675 per share.
Sanford C. Bernstein increased its target to $645 from $637. Evercore ISI and Cantor Fitzgerald both established targets around $640.
The consensus price target stands at $634.59. That suggests upside potential from current trading levels.
Microsoft commands a market capitalization of $3.77 trillion. The stock trades at a price-to-earnings ratio of 36.07.
The company maintains strong financials with a debt-to-equity ratio of just 0.12. Its current ratio sits at 1.35.
Microsoft’s 50-day moving average is $514.32, while the 200-day average stands at $490.44. Shares have gained 21% so far this year.
The company also announced a major international expansion. Microsoft plans to invest $15.2 billion in the United Arab Emirates through 2029.
Smith’s stock sale represented a 7.7% reduction in his ownership stake. Trading volume on Wednesday exceeded the average by 5%.
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