Uranium Energy Corporation Down 12% After Short Seller Says Actual Value Is At 30% Of Current Market Cap

Shares from uranium mining company Uranium Energy Corp. UEC are down 11.9% on Thursday after the release of a short report by investment firm and short seller Kerrisdale Capital.

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Kerrisidale is arguing that the mining company's stock is inflated above the price it should have according to its revenue, holdings and viable operations. Kerrisdale announced it’s shorting the stock.

UEC's market capitalization of more than $1 billion "and its success in selling almost half a billion dollars' worth of stock over the last 20 years (excluding its initial public offering), are a testament to the triumph of the company's prolific use of paid stock promotion," said Kerrisdale analysts.

Benzinga reached out to UEC but the company didn't immediately respond to a request for comments. 

Kerrisdale estimated UEC's actual market value is about $350 million, or about 30% of its current price.

UEC has been in the uranium sector since 2005, but only managed to produce revenue from mining this mineral between 2012 and 2013, say the short sellers, who claimed the company failed to take advantage of the last two uranium bull markets.

"As we dug into UEC's deposits, we discovered that the resource edifice is just a façade," reads the report.

Kerrisdale argued UEC's purchases of uranium deposits during recent years (sustained by selling its stock at high prices) are mostly unprofitable, with only a quarter of them able to lead to revenues in the medium to long term.

The firm said it's optimistic about uranium prices and believed that these "need to rise to meet continued demand growth."

Uranium is used in the military weapons supply chain and as a component in nuclear power reactors. It also has applications in medicine and industry.

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Photo: Public domain image from Wikimedia Commons.