Here’s Why DryShips Inc. (DRYS) Is Plunging
DryShips Inc. (NASDAQ:DRYS) management announced that a reverse stock split is in the cards, sending shares plunging nearly 20% in after-hours trading.
The company’s Board of Directors has determined to effect a 1-for-4 reverse stock split of the Company’s common shares. At the Company’s annual general meeting of shareholders on October 26, 2016, the Company’s shareholders approved the reverse stock split and granted the Board, or a duly constituted committee thereof, the authority to determine the exact split ratio and proceed with the reverse stock split.
The reverse stock split will take effect, and the Company’s common stock will begin trading on a split-adjusted basis on the Nasdaq Capital Market as of the opening of trading on April 11, 2017 under the existing trading symbol “DRYS”.
Editor note: Reverse stock splits have come to a bad reputation, as most companies that end up in that situation are under a lot of duress. Their stocks have been declining for a long time. The issues that cause that typically haven’t gone away, and their stocks continue to decline, probably would have whether they did a reverse split or not. But certainly, they’re doing it from a position of weakness.
DryShips, Inc. engages in ocean transportation services for drybulk and petroleum cargoes. The company operates its business through three segments: Drybulk and Offshore support. The Drybulk segment provides drybulk commodities transportation services for the steel, electric utility, construction and agri-food industries, which consists transportation and handling of Drybulk cargoes through ownership and trading of vessels. The Offshore Support segment consists of offshore support services to the global offshore energy industry through the operation of a diversified fleet of offshore support vessels.