What happened

Shares of DryShips (DRYS) sold off again on Friday, sinking 28% by 10:30 a.m. EDT after the company announced yet another reverse stock split.

So what

DryShips said yesterday that it would enact yet another reverse split to boost its ailing stock price, this time giving investors one share for every four that they currently own. That'll reduce its outstanding share count, which has exploded higher this year as a result of a multitude of equity issuances:

A chart showing DryShips rising share count.

Data source: DryShips. Chart by author. In millions of shares.

So far this year DryShips has issued nearly 150 million shares in exchange for $400 million in cash to rebuild its fleet. The company quickly put that money to work, spending $662 million on 14 vessels. Meanwhile, more dilution is likely on the way after the company recently signed another equity issuance agreement that could see it sell $226.4 million in stock over the next two years.

While DryShips' decision to issue equity enabled it to rebuild its fleet quickly, its stock price has suffered under the weight of the new shares, plunging 97% since the start of the year. That dive has recently pushed its stock price below $1, which it's attempting to reverse with this latest split.

A storm at sea.

Image source: Getty Images.

Now what

Investors, however, shouldn't hold out too much hope that this split will stop DryShips' seemingly unending slide. That's because it already enacted a 1-for-8 split in January, and completed several reverse splits last year, including a 1-for-25 split. While these actions pushed the stock up higher for a little while, the weight of newly issued shares pushed it right back down. Instead, the only thing that can halt its slide is a significant improvement in earnings, which will only come if shipping rates keep rising.