For Day Traders, DryShips Might Be The Gift That Keeps On Giving

DryShips Inc. DRYS shares are up 11.6 percent Thursday after the company reported it has fully repaid its final remaining commercial loan debt.

The market clearly sees the announcement as a positive for DryShips, but long-term investors might be afraid of buying the unpredictable and extremely volatile stock.

The company now says it has $6.52 per share in cash on its balance sheet, $4.04 in book value from its vessels, a Sifnos loan facility balance of around $200 million and 58,905,719 shares outstanding.

“Having all our assets debt free, no mandatory loan payments over the next 4 years and available liquidity of $384 million, we strongly believe that our efforts to access bank debt financing for the first time since November 2014 will be successful and will allow us to further grow the size of our fleet,” CEO George Economou said in a statement.

Interesting Year

Economou has been harshly criticized for the approach he has taken to restructuring DryShips. Despite Thursday’s big gain, DryShips shares are down 99.3 percent in the past six months. Earlier this month, DryShips completed its fifth reverse stock split in a 13-month stretch. Just over a year ago, a single share of DryShips today would have represented 51,200 shares of the company.

Related Link: Why Is DryShips Allowed To Keep Reverse Splitting?

Economou owns much of DryShips’ debt and has been paying himself interest on that debt while DryShips repeatedly dumps shares into the market to dilute common shareholders. Although Economou’s influence on outside DryShips investor Kalani Investments is up for debate, traders have speculated Economou is using Kalani to recapitalize DryShips and unload assets at the expense of DryShips shareholders. Some traders have even speculated Economou plans to build DryShips’ fleet as much as possible before completely taking over the company himself somewhere down the line.

Day Trading

For day traders, DryShips has been a godsend. The company’s high visibility, extremely low float, high short interest and never-ending stream of headlines throughout its restructuring process has routinely sent shares surging or falling 30 percent or more within hours or days. Back in November, DryShips shares jumped from under $4 per share to above $100 within a week before giving up all of those gains in the following weeks.

While volatility traders are experiencing the opportunity of a lifetime with DryShips, the company still needs to demonstrate some semblance of stability, a viable path to long-term earnings growth and some clarity on exactly what Economou has in mind in the future.