DryShips Inc. (NASDAQ: DRYS)
DryShips has been an incredibly interesting stock to follow as of late. Since the presidential election in which Donald Trump took the victory, the stock has been on a wild ride. In fact, just this week, the stock saw gains of more than 30% on Monday, only to find itself back near the week’s opening price today. So, what’s happening? Today, I’ll do my best to explain the movement.
Why DRYS Was Up
On Monday, DryShips went on yet another massive run, something we’ve seen from the stock quite a bit recently. This time around, the run was the result of an SEC filing showing that the company sold 32 million shares to Kalani Investments Ltd. This is where things start to get interesting.
You see, Kalani Investments is a company headquartered in the Caribbean. The entity is largely unknown. What’s more, there is no confirmation as to whether or not the company still owns the stock. In fact, many, including Karen Finerman from CNBC speculate that Kalani has sold its stake over the past week or so.
Nonetheless, when the SEC filing dropped, the stock climbed dramatically, as you would expect. After all, the shares were purchased at $6.30 per share. This is incredible considering that for the past couple of weeks it has been around the $2 mark. So, as we would expect, DRYS screamed toward the top.
Why The Stock Is Down
While DRYS had a great day on Monday, the stock didn’t do so hot yesterday, and today we’re seeing more of the same. In fact, the stock is trading at $4.16 per share at the moment (10:25), after a loss of $13.84 per share thus far today. So, why is the stock falling?
Well, first and foremost, as various pros in the industry continue to outline the idea that Kalani sold that massive stake to a sucker, investors continue to get concerned. The truth is that the company is in hot water. While they do have a decent sized fleet, they are throwing money in the water to keep the fleet alive, losing around $1,500 per ship per day in the process.
On top of that, there are more concerns. Recently, Seeking Alpha released a report showing that the SEC should investigate the company for lying on 6k filings through the use of Panama Proxies and corrupt Canadian officials. We covered that story in depth and believe that it will lead to something that could be the nail in the coffin at some point. Nonetheless, only time will tell where that goes.
One thing we do know is that the ship at DRYS is just barely holding on at the moment, and with big concerns across the board, it only makes sense.
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 news surrounding the potential SEC investigation into the company’s alleged lies, the financial situation moving forward, and of course, investor reactions. We’ll keep a close eye on the news and bring it 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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[Image Courtesy of Wikimedia]