Helbiz (NASDAQ:HLBZ) stock is up over 25% today on reports that the transportation company’s chief executive officer bought four million shares.
A regulatory filing with the U.S. Securities and Exchange Commission (SEC) shows that Helbiz CEO Salvatore Palella purchased four million shares of HLBZ stock in a big insider move. News of the stock purchase comes days after Helbiz completed its acquisition of Wheels Labs, a move that is expected to provide more than $25 million in revenue for the full year 2022.
Helbiz is an urban transportation company that builds and sells scooters, mopeds, and other micro vehicles in densely populated cities that struggle with high levels of traffic congestion. Founded in Italy, Helbiz is now headquartered in New York City. Prior to today, HLBZ stock was down 96% this year and trading at 23 cents per share, putting it deep in penny stock territory.
Helbiz founder and CEO Salvatore Palella recently bought $750,000 worth of HLBZ stock at an average price of 19 cents a share. That purchase increased his holdings in the company by 72%. Investors are reacting positively to the purchase by Palella as it is viewed as a vote of confidence in the company.
This latest purchase was not Salvatore Palella’s biggest acquisition of HLBZ stock this year. The chief executive previously bought $2.4 million worth of shares at a price of $1.50 each. At the same time, Helbiz’s fortunes are expected to improve following its acquisition of privately held Wheels Labs, which manufactures sit-down scooters and has a large presence in Los Angeles, California.
In a media statement, Helbiz said that the combined companies expect to achieve a positive gross profit margin within nine months and profitability at the operating level within two years.
Why It Matters
Insider buying of a company’s stock by senior management is viewed as a positive development by investors as it indicates that the people who own and/or run the organization feel the shares are undervalued and destined to rise. Palella is seen as being bullish about his company and continues to purchase HLBZ stock as the price declines. Helbiz insiders have also not been selling any stock in the company, which is also encouraging.
The purchase of Wheels Labs is expected to help boost Helbiz’s business and give the company immediate access to the Los Angeles market, which has some of the worst traffic in the world and a population of nearly four million people. The combination of insider stock purchases and the conclusion of the Wheels Labs acquisition has investors feeling positive about HLBZ stock today.
HLBZ Stock: What’s Next
While today’s move higher in HLBZ stock is good news, investors need to remember that the company’s share price is down 96% and an extremely depressed penny stock.
Also, the buying that occurs today could prove to be short-lived if investors quickly move to take profits and dump their shares. For these reasons, investors should be careful with Helbiz stock.
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On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.