In early afternoon trade the Catapult Group International Ltd (ASX: CAT) share price looks set to end its recent strong run with a sharp drop lower.
At the time of writing the sports analytics company's shares are down over 4.5% to $1.57.
What happened?
This morning Catapult announced that co-founders Shaun Holthouse and Igor van de Griendt plan to offload 6 million shares to institutional investors.
According to the release, this is the first time the co-founders will have sold shares in Catapult since its listing on the ASX in December 2014.
Furthermore, it represents less than 15% of the co-founders total holdings in Catapult and will leave Mr Holthouse with a holding of 21.3 million shares and Mr van de Griendt with a holding of 20.5 million shares.
Neither have plans to offload any more shares before the end of the current financial year.
Why have they sold shares?
Both Mr Holthouse and Mr van de Griendt have undertaken the sale in order to "satisfy personal financial commitments."
No details have been given in regards to the price that the sale will take place at if successful.
Should you sell your shares?
While I never like to see directors selling their shares, I wouldn't necessarily read too much into this sale. Both directors have a significant amount of their wealth tied up in Catapult shares and it makes sense for them to look to diversify this.
Furthermore, they both still have a hefty stake in the company and are aligned well with shareholders. As a result, I wouldn't suggest investors sell their shares on this news.
Not that I would necessarily be a buyer of its shares just yet. I have been a little disappointed with its progress over the last 12 months and would like to see improvements in its free cash flow generation before taking the plunge.
In the meantime, I think fellow up and coming tech shares such as Appen Ltd (ASX: APX) and Altium Limited (ASX: ALU) may be better options.
