Roughly three months ago, I warned investors in DryShips (NASDAQ:DRYS) and many of its counterparts that these stocks were in a bubble and investors needed to get out quickly. A massive rally took place with help from the rise in the Baltic Dry Index, but many names soon plunged and capital raises were launched. DryShips has since diluted investors several times over, and recent results do not inspire much confidence.
The company announced Q4 earnings this week, and the highlight was a massive impairment charge. Even without it, DryShips still lost money in the period, and that was despite the strength of the Baltic Dry Index. The BDI hit a high of 1,257 last quarter, but it now trades for barely over 700. The index is down almost 27% year to date, falling basically by the day currently as seen below.
Those that are bullish will point to the company's statement in the earnings release that it had $243 million in cash and equivalents as of February 7th, or about $6.70 a share. While that's much higher than where shares trade currently, the company also has third party loans of $16.5 million and a loan facility balance of $142.9 million. Also, the company currently has four vessels that are basically sitting idle at this point. With less vessels being used than the year ago period, revenues have fallen and net losses have piled up.
DryShips' shares currently trade for a little over $4.00 a share, halfway between the current 52-week low and this month's high. Remember though, that the one-year high is more than $2,200 when accounting for all the reverse splits. With the Baltic Dry Index continuing to sink, DryShips remains in a precarious spot. It would not surprise me if recent optimism fades and the company is forced to reverse split the stock yet again.
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