Key points
- CEO, CTO and a director sold $29.6 million on September 4
- Two sales were under plans adopted May 20
- Six insiders have sold $296 million since June
- Three more lockup releases due by October 28
Three Cerebras Systems (CBRS) insiders sold $29.6 million of stock on Friday, September 4, the day the shares rose 10 percent. Chief executive Andrew Feldman, chief technology officer Sean Lie and director Steven Vassallo sold a combined 140,901 shares at an average of about $210. Their sales bring the total reported by six Cerebras insiders since June to $296 million, according to our insider tracker.
The filings appeared on the tracker on Tuesday, September 8. Lie sold 53,460 shares for $11.2 million, Vassallo sold 50,000 shares for $10.5 million, and Feldman sold 37,441 shares for $7.9 million. Lie separately donated 16,038 shares to a donor-advised fund, a charitable account. Cerebras closed Tuesday at $199.77, below all three insiders' sale prices.
The filings say Lie's and Feldman's sales were made under Rule 10b5-1 trading plans that both adopted on May 20, six days after the company's IPO. A 10b5-1 plan is a set of instructions an insider adopts in advance, which can name dates and amounts or use formulas and price conditions, so the trades are decided before the insider knows how the stock will be trading. Lie's and Feldman's sales followed instructions adopted in May, rather than instructions newly issued during Friday's rally. Vassallo's filing doesn't mention a plan. His shares were sold from two family trusts.
How much have Cerebras insiders sold since the IPO?
Cerebras sold shares to the public at $185 on May 14 and closed its first day at $311.07, up 68 percent. Insiders weren't allowed to sell at first. The company's lockup, the agreement that keeps insiders from selling for a period after an IPO, releases shares in stages tied to earnings dates and fixed dates rather than all at once, according to the prospectus. The first insider sales in our records came on June 25, a day after the company's first quarterly report.
Since then, six insiders have filed 18 sales totaling $296 million. Lie accounts for $169 million of it, including a single $151 million sale on August 20 under his plan. Feldman has sold $64 million, chief operating officer Dhiraj Mallick $23 million, Vassallo $21 million, director Eric Vishria $16 million and chief accounting officer Yagnesh Patel $3 million. Lie still holds about 7.6 million Class B shares after the September 4 sale, and Feldman about 13.9 million, according to their filings. Class B shares carry extra votes and convert to ordinary Class A shares one for one.
The stock hasn't held up while this was happening. It fell 12 percent the day after second-quarter results on August 12, even though the company said its core revenue more than doubled, and it closed at $199.77 on Tuesday. That's 8 percent above the IPO price and 36 percent below the first-day close.
What comes next?
More shares come free to sell. Under the prospectus, directors, officers and other pre-IPO holders get another 8.9 percent of their locked shares released on each of September 30, October 14 and October 28. Everything left is released two trading days after Cerebras reports third-quarter results, or 180 days after the IPO if that comes first. Plan sales by Lie and Feldman can continue on whatever schedule their May 20 plans set, which the filings don't disclose.
The filings don't establish why each insider sold or what they think the stock is worth. Lie's and Feldman's latest sales followed prearranged plans. What the records show is the pace: $296 million in ten weeks from six people. Cerebras's full filing history is on its filings page, and we looked at which hedge funds bought in after the IPO in August.
