The 20% drop in DRYS shares today is frightening for investors, obviously. Clearly, shipping demand is/has/will going to decline. The China stimulus plan yesterday made no difference; because 41% of DRYS' fleet is exposed to the spot market, shares get hit harder when the rates decline. At this point, investors need to assess the likelihood of bankruptcy and make their own determination. This is a market where valuations don't matter. If DRYS started scrapping ships today, and sold off the UDW drilling business, I think equity holders would get more than the current share price after debt payments. I don't like the fact that the company agreed to buy new Capesize ships at what is now an obviously high price. Do remember the CEO took a fixed number of shares of stock and not cash from the company when he sold the ships to them. He owns a bulk of the shares. The next month or two will tell us a lot about the company's capital structure.
Position: none, but am thinking very hard about purchasing at $10
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