DryShips shares plunge 30% on news of third reverse stock split this year

DryShips shares plunge 30% on news of third reverse stock split this year

Shares in George Economou’s DryShips plunged over 30% today after the Nasdaq-listed company announced its third reverse stock split this year.

DryShips announced the 1-7 reverse split yesterday after it was approved at the annual AGM, with the split to take effect on May 11 reducing the number of common shares from 65,564,307 shares to around 9.4 million shares.

Investors have dealt with all three reverse splits this year in brutal fashion, and today sent DryShips shares down over 30% to just 74 cents. After a reverse split in January, shares were trading at $8.08, and proceeded to drop to 70 cents in April after a subsequent 1-4 reverse split was announced.

Earlier this week, four US national securities law firms announced they were investigating potential securities fraud at the company, stemming from a Wall Street Journal article focusing on the sale of shares last year and subsequent share offerings to Kalani Investments.

DryShips shares have lost around 99.4% of their value since the start of this year, and $100,000 invested in the stock a year ago on May 4, 2016 would be worth just $12.72 today.

Grant Rowles

Grant spent nine years at Informa Group based in London, Sydney, Hong Kong and Singapore. He gained strong management experience in publishing, conferences and awards schemes in the shipping and legal areas, working on a number of titles including Lloyd's List. In 2009 Grant joined Seatrade responsible for the commercial development of Seatrade’s Asia products. In 2012, with Sam Chambers, he co-founded Asia Shipping Media.

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5 Comments

  1. Avatar
    milo
    May 4, 2017 at 4:06 pm

    the management of this company are criminals and the sec should be going after these people. the stock should not be allowed to trade!

  2. Avatar
    Brigstocke Lexden
    May 4, 2017 at 6:02 pm

    Thanks for your article Grant, but the loss to anyone who invested one year ago is actually even worse than your figures indicate:

    Nasdaq share price on 4 May 2016 at market close was US$5817.3091
    An investment of US$100,000 would have purchased 17.19 shares

    The 8 to 1 share consolidation (a better description than reverse stock split) in Jan 2017 would have reduced the shareholding to 2.15 shares

    The 4 to 1 share consolidation in Apr 2017 would have further reduced the shareholding to 0.54 shares

    0.54 shares at the price you mentioned (today) of US$0.74 means that your US$100,000 investment is now worth just US$0.41 (try explaining that to your wife or mistress)

    (Your figure of US$12.72 was derived by using the original shareholding of 17.19 shares, without making any allowance for the share consolidations)

    1. Grant Rowles
      Grant Rowles
      May 5, 2017 at 3:39 am

      My understanding is that the reverse splits are already factored into the historical pricing, either way its a poor return!

  3. Avatar
    Andrew Craig-Bennett
    May 5, 2017 at 9:50 am

    The only surprising thing about this news is that anyone was surprised.

  4. Avatar
    Adjo Kabeya
    May 6, 2017 at 6:09 pm

    The people behind this fraud should be jailed and never allowed this company to be in a stock market again.
    The sad news is that nobody is going after them so they have a free pass to continue their frauds.