Can anybody explain Dryships?

[Russ Smith]

DRYS. I haven't owned it in ages but what an insane run this week.

Opens monday at 14.50, closes 42.86. Tue opens at 55, high of 110, closes at 73. Wed halted all day. Thur opens at 51.08 closes at 11 down 80%.

So in about a week it went up 14 fold and then fell 80%.

 

[BillsCarnage]

This article came out not long ago. Not sure i totally understand it though. The lower the price the more shares get issued until it's basically worthless or has $100mil worth of shares issued?

http://seekingalpha.com/article/4024428-just-happened-dryships-name

The proper name for what just happened is "death spiral financing". It's financing which produces a death spiral for the stock price, because the lower the share price is, the more the shares are issued. The following table straight out of DryShip's 8-K illustrates it:.....

Therein lies the continued pressure even after falling 78% as of this writing. Since the lower the stock goes the lower the financier gets his shares (always at a discount to market prices), the financier can basically sell at any price and make money. So, until the market eats $100 million in DryShip's shares, the pressure is unrelenting. This issuance will represent ~90-99% dilution no matter the level it happens at.

 

[jf-08]

Never heard of this. Interesting to say the least.

 

[oaken1]

were there splits in there? without any apparent disaster usually a split is the reason for a huge per share drop... most stocks will split when they hit around $100 but startups and IPO's may split sooner which benefits the initial investors.

 

[Russ Smith]

were there splits in there? without any apparent disaster usually a split is the reason for a huge per share drop... most stocks will split when they hit around $100 but startups and IPO's may split sooner which benefits the initial investors.

Near as I can tell it wasn't a split. I think people bid it up expecting some news and when the news didn't come, it tanked.

But I bet the SEC is looking into it. It's at 5.76 right now so half what the low was after it fell 80%.

 

[AsUpRoDiGy]

Sounds like major dilution. Company probably issued more shares against the float to pay off debt. This company loses $660M a year with meager gains. So between dilution, low gains, and high debt...this is simply a pump and dump stock.