THEY ARE CALLING $2.53 EITHER TODAY OR TOMORROW.
Conclusion
DRYS current price of around $1.80 on March 16th is a discount from the estimated Fair Value per Share of $2.53. The removal of the downward pressure of the stock offering may facilitate a steady rise in stock price to the estimated Fair Value per Share.
DryShips Inc.: Today Is The Day
Mar.16.17 | About: DryShips Inc. (DRYS) Get Alerts
Morningsidepark
Morningsidepark
Value, special situations, energy, commodities, shipping, long only
(532 followers)
Summary
DryShips trading volume was a very light 68.39 million March 13th to March 15th. The VWAP was $1.762.
DryShips has not filed a 6-K yet, so common stock issuance under the Prospectus Supplement continued today March 16th.
The good news is that volume finally recovered this morning (trading 18.5 million shares by 11am) and, after an initial sell-off, the stock has started to climb from yesterday's close.
DryShips will have completed the offering by early afternoon today and, barring a negative catalyst from the Company, the stock should trade towards its FMV.
Due to very light trading volume of 68.39 million shares from March 13th to 15th, DryShips Inc. (NASDAQ:DRYS) continued to issue common stock today, March 16th, under its $200 million Prospectus Supplement and through a Purchase Agreement with Kalani Investments. The good news is that volume finally recovered this morning with 18.5+million shares trading by 11 am. Volume is headed towards a robust level that will easily exhaust the small amount of stock that remained to be issued.
As discussed in this prior article (DryShips: 20-F Contained Update on Stock Offering), only $17.9 million of common stock remained to be issued at the start of this week. As of 11am this morning, 86.9 million shares had traded this week at a VWAP of roughly $1.75. Assuming issuance equal to 14% of the shares traded (an issuance rate similar to the week ended March 10th) and a 15% discount to the VWAP, DRYS would have been able to issue $18.1 million shares, i.e. it would have completed the offering. Assuming that 40 million shares trade today, the issuance rate would need to decline to 11% at an issuance price of $1.50 for DRYS not to complete the offering. This seems unlikely.
With the $200 million common share offering under the Prospectus Supplement finally complete, downward pressure on the stock will be alleviated and it should begin to trade towards the $2.53/share Fair Market Value calculated in my prior articles.
Conclusion
DRYS current price of around $1.80 on March 16th is a discount from the estimated Fair Value per Share of $2.53. The removal of the downward pressure of the stock offering may facilitate a steady rise in stock price to the estimated Fair Value per Share.
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