DryShips Inc. (NASDAQ: DRYS) is having an incredibly rough time in the pre-market trading hours today, and for good reason. The company announced a reverse stock split that seems to be concerning investors. As a result, the stock is falling in a big way, prompting our partners at Trade Ideas to alert us of the movement. At the moment (8:31), DRYS is trading at $0.81 per share after a loss of $0.22 per share or 21.36% thus far today.
DRYS Announces Reverse Split
As mentioned above, DryShips is having a rough morning in the market this morning after announcing a reverse stock split. The company announced that it would be moving forward with a 1 for 4 reverse split, which has already been approved by the board and by its shareholders.
On April 11th, at the opening of the market, the reverse split will take effect. Of course, a 1 for 4 split means that for every four shares owned at the moment, investors will be issued one share with four times the value.
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Why This Is Causing Declines
At first glance, it may be hard to see why a split like this would cause declines. After all, the fact that one share is being traded for four shares, but the value of ownership doesn’t change doesn’t seem all that bad. However, it’s the reason for the split that is concerning to investors. DRYS has to move forward with a reverse split because the stock’s price is dangerously low, which could lead to delisting from the NASDAQ. Unfortunately, the reverse split is the only way the company sees increasing its stock price out of the danger zone… or at least, that’s how it’s perceived by investors.
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on DRYS. In particular, we’re interested in following the company through the reverse split and any news associated with growth or lack there of ahead. Nonetheless, we’ll continue to follow the story and bring the news to you as it breaks!
What Do You Think?
Where do you think DRYS is headed moving forward? Join the discussion in the comments below!
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