DryShips Inc. (NASDAQ:DRYS)

Q: What is wrong with DRYS? It has a 1.1 bil gross rev and it's down from $81 to $6.


A: DRYS is tied to what is known as the Baltic dry bulk index.  This index determines rates shippers, such as DryShips, can charge to move dry bulk goods by sea.  This index topped out at near 12,000 in May 2008 and fell to about 660 in December.  It is often considered a proxy for global economic activity as producers require more raw goods, the rates to ship them increase.  This index has started to tick up recently and it is at about 3500 as of Friday.  SmarTrend called a Downtrend on DRYS in September of 2008 at $62 before the bulk of the drop occurred.  After a few attempts at a rally and corresponding Uptrends, we currently have DRYS in a Downtrend since May 14 and the stock has pretty much languished since.  The company was forced to sell stock at low price levels which has resulted in some dilution and increased supply of stock.  We will need much more demand in the dry bulk space which can only come from improved economic activity before we will see higher prices for DRYS.