RXO

$RXO Director Makes Back-to-Back Purchases as Stock Hits Multi-Year Lows – A Vote of Confidence?

05/16/2025 19:34

Logistics solutions provider $RXO is drawing investor attention as a board member makes consecutive share purchases amid a significant stock price decline. Thomas Szlosek, a director at RXO, acquired shares in two separate transactions within a five-day span, following a steep drop in the company's stock price from $19.55 in early April to around $14. Szlosek made his first purchase on May 9, 2025, acquiring 8,700 shares at an average price of $14.41, investing approximately $125,354. He followed this with an additional purchase on May 14, buying 7,500 more shares at $16.65 each, investing another $124,875. These consecutive transactions, totaling $250,229, signal a strong vote of confidence from the insider at a time when the company faces significant challenges. RXO provides asset-light transportation solutions across North America, Europe, and Asia. The company specializes in tech-enabled truck brokerage services, managed transportation, freight forwarding, and last-mile delivery solutions. Its digital platform, RXO Connect, enhances operational efficiency through features like Freight Optimizer and real-time tracking capabilities. In a notable strategic move last year, RXO acquired Coyote Logistics from UPS for $1 billion. This acquisition was intended to bolster its service offerings and operational capabilities, but recent performance has fallen short of expectations. In its Q1 2025 earnings report released on May 7, RXO reported an adjusted loss of 3 cents per share, worse than analysts' expectations of a 2-cent loss. Revenue increased by 57% year-over-year to $1.43 billion but still missed the market forecast of $1.49 billion. The company recorded a net loss of $31 million for the quarter. Compounding these disappointing results, in early April, Oppenheimer downgraded RXO's rating from 'outperform' to 'perform' and withdrew its price target of $25, citing economic uncertainty and a weak trucking environment. This downgrade put additional pressure on the stock price. In this context, Szlosek's consecutive purchases may indicate an insider's belief that the current share price undervalues the company. Insider transactions, particularly share purchases by board members, are often viewed as reflections of management's confidence in a company's future prospects. Notably, this is not the first significant insider buying at RXO. In August 2024, major shareholder MFN Partners, LP purchased over 10.26 million shares at an average price of $20.21, investing a total of $207.5 million. This was part of a $550 million private financing initiative for the planned acquisition of Coyote Logistics. However, following MFN's substantial investment, RXO's stock price experienced volatility before beginning a sharp decline in February of this year. On February 5, the stock plunged 16.6% to $21.11 after reporting a larger-than-expected quarterly loss. At that time, RXO reported a $20 million loss for Q4 2024, with brokerage volume declining by 6%. As Warren Buffett famously advised, "Be greedy when others are fearful," Szlosek's recent purchases are particularly significant as they occurred during a period of negative market sentiment and steep stock decline. Currently, RXO's stock price stands at $17.07 (as of May 15), representing an approximately 18% increase from his first purchase date on May 9 ($14.47). In the stock market, insider transactions, especially consecutive purchases, are considered important signals. Insiders have more information about a company's intrinsic value and future prospects than outside investors. While not a cluster buying situation (multiple insiders buying simultaneously), Szlosek's consecutive purchases may suggest an insider's belief in RXO's long-term value. Currently, the analyst consensus on RXO is 'hold' with a median price target of $20, approximately 17% above the current price. Despite negative earnings revisions following the recent earnings report, the board member's active buying behavior could be a positive signal for long-term investors. Of course, insider buying does not guarantee short-term stock appreciation. RXO still faces challenges with profitability and high valuation metrics (trailing P/E of 715.33, forward P/E of 156.25). Additionally, the integration process following the Coyote Logistics acquisition and the overall weakness in the trucking market may continue to pressure the stock price. However, looking at RXO's long-term outlook, the integration with Coyote Logistics is expected to generate over $70 million in cash synergies, and growth in the last-mile and Less-Than-Truckload (LTL) segments is noteworthy. In Q1, the last-mile services segment showed strong growth with a 24% increase in stops year-over-year, while LTL brokerage volume increased by 26%. Investors should monitor RXO's upcoming quarterly results, the progress of the Coyote Logistics integration, and overall trends in the trucking transportation market, alongside Szlosek's bullish insider activity. Despite the strong signal of insider confidence, sustained stock price appreciation will likely depend on the company's ability to return to profitability and demonstrate tangible growth.

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