Thursday, April 13, 2017

The Amazing Shrinking Stock

One of the most amazing stories in the stock market is about a company called Dryships, a Greek shipping company. When companies grow, their stocks often split, but Dryships has fallen on hard times, and its stock has reverse-split - by a whopping 48,000 to 1.

Let's say you owned 48,000 shares of Dryships back in early 2016. It had a reverse split of 1-25 that March, which means your original 48,000 shares were now just 1,920 shares. Five months later, in August, it did another 1-4 reverse split, reducing the 1,920 shares down to 480. Just three months later, there was a 1-15 split, so those 480 shares you now held were reduced to just 32 shares. In January of this year, Dryships did a reverse split of 1-8, which reduced those 32 shares to just four. Then, this week it did another reverse split of 1-4 shares, reducing your original 48,000 down to just one measly share.

On a split-adjusted basis, Dryships was trading at over $8,000 per share back in early 2016. After all those reverse splits, it now trades at under $2 per share.

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