Have you noticed a pattern with some really painful stocks where the promoters keep diluting the stakes primarily to be NASDAQ compliant or to meet their debt obligations? In this post I will provide some stocks which have destroyed stakeholder value consistently.
The first example is DryShip (Ticker: DRYS) Bulk Shipping Stock. The stock roughly goes through a reverse split every 2.6 month and went through it’s 5th Split in 13 months on April 11 2017. During late 2016, there was huge short squeeze and the price reached a max of 120 Dollars/Share. Currently the stock is trading at 1.93 Dollars/Share. Most long investors have lost money in this counter, however if you see the charts closely it has a very clear pattern, it spikes post a reverse split or a positive news (good co-relation to Baltic Dry index or announce on a special dividend) and then short sellers get in action and bring it to a sub Dollar level for it to prepare for another consolidation.
Our next example is GBSN (Great Basin Scientific Inc.) which was listed in NASDAQ. GBSN (Great Basin Scientific Inc) is another miserable stock which had three splits between 12/14/2015 and 09/16/2016 ( 1:60, 1:35 and 1:80). The stock spiked post the split or due to a positive news (Some of their products were approved by FDA), however poor results and the company fundamentals (They have good products but they are not making money and always need cash) always brought it down as it kept diluting to meet it’s financial obligations or meet it’s working capital needs. The stock was such a misery that it could not even comply with Nasdaq guidelines and is finally trading in the OTC market.
Their are no short cuts to earn fast money and while you are invested in the stock market, invest in sound business after doing your due diligence but at all cost avoid these stocks.
And here we go again, both GBSN and DRYS have announced another round of reverse splits, why can't they delist these firms. Feel sorry for the longs here but I think this is equivalent to the stock price manipulation.
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