Shares in George Economou’s DryShips plunged 40% yesterday as investors abandoned the stock on the back of its announcement on Tuesday that it was undertaking its fifth reverse stock split this year.
DryShips shares fell 33 cents in trading on the Nasdaq yesterday to close on just $0.50, adding to recent losses which have seen the stock drop 90% in the last month alone. Tomorrow is likely to see further losses, with previous reverse splits resulting in drops of over 30% once the split comes into effect.
Compounding negativity surrounding the stock is the growing amount of legal action against the company.
Last week, three law firms launched class action law suits against DryShips, alleging it violated federal securities laws. So far this week, another twelve firms have launched suits against the company.
Earlier today, Splash revealed that Economou is also facing a legal challenge to his offshore firm Ocean Rig, with New York lawyer Tally Wiener contesting the company’s Chapter 15 process.