But now what once was a rally for the ages has turned into a virtual bloodbath.
DryShips Inc. (NASDAQ:DRYS), once up more than 1,900% over the past several sessions, has been cut by more than two-thirds this afternoon, down over 70%. The stock was halted for yesterday’s entire trading session, and didn’t begin trading again until today at 10:30 eastern time. That’s when the company announced a massive secondary stock offering, designed to raise money to save the ailing company:
The gross proceeds from the sale of the securities will be approximately $20 million. The Company may further receive up to an aggregate of $80 million if all of the preferred warrants are exercised, for total proceeds of $100 million.
The announcement sparked a major sell-off not just in DryShips’ own shares, but across the entire industry as well.
Diana Containerships Inc (NASDAQ:DCIX) plunged more than 50% in afternoon trading Thursday, with other notable shipping plays are down by similar amounts.
As we warned investors yesterday and today, it’s wise to stay far, far away from some parabolic moves. Expect the purge of shipping stocks to continue for the foreseeable future, because their rally wasn’t based upon anything substantial to begin with.