DryShips Inc. (NASDAQ: DRYS) is having an overwhelmingly rough day in the market today, and for good reason. Ultimately, the declines are a side effect of the 1 for 5 reverse stock split that took effect today. Of course, this split is leading to concerns among investors, causing the losses and prompting our partners at Trade Ideas to alert us to the movement. At the moment (9:39), DRYS is trading at $3.33 per share after a loss of $0.92 per share (21.65%) thus far today.
DRYS Moves Forward With A Reverse Stock Split
As mentioned above, DryShips has been forced to move with yet another reverse stock split. The split was a 1 for 5, which means that for every 5 shares, investors now have 1 share that, at the time of the split, was worth 5 old shares. As we know, that value didn’t stick around for long.
The truth of the matter is that when we look at why DRYS needed to move forward with the split, it’s clear as to why investors are reacting negatively to it. At the end of the day, the NASDAQ has a rule that all stocks must maintain a price of $1 per share or more. Trading below that $1 puts listed companies at risk of being delisted. With the price under $1, the management team at DRYS couldn’t come up with a way to push the value up and they surely weren’t going to invest their own money. So, once again the company did what they have been known to do, push the value up at the expense of investors.
The truth of the matter is that this isn’t the first reverse split out of DryShips recently. In fact, reverse splits seem to be a common occurrence surrounding the stock. That’s because the stock has taken a dive over the past year, in fact, it has lost a dramatic amount of money year to date. If we take away all of the reverse stock splits, it’s easy to see that DRYS has lost approximately 99.9% of its value year to date. To put that into perspective, if you had $100 invested in the company on January 1st, you now have about a dollar left!
Ditch This Warm Pile Of Manure!
The bottom line is that DRYS simply doesn’t have a leg to stand on. George Economou, the CEO of the company has poisoned the stock with toxic financing while he continues to take an exorbitant salary at the expense of investors. Through the process of loaning the company money at exorbitant rates, and laying the risk of these loans on DryShips, Economou has set a plan in place by which he is able to take the money you invest and liquidate it into cash that’s destined for his own pocket.
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The Bottom Line
I’ve been saying this for some time now. DRYS will eventually make it to zero and those holding shares of the stock will be left holding an empty bag of Economou branded manure that’s too toxic to fertilize your roses with! Don’t trust me, do your own DD. Perform a couple of searches, learn about previous stock splits, dig into the finances, and take a look at Kalani investments. When you do, make sure you’re sitting down; the surprising picture would be enough to knock even the SEC off of their feet. That is, if they took the time to investigate!
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