Shares of dry bulk oceangoing shipper Star Bulk Carriers Corp. (NASDAQ:SBLK) plunged 20.4% in the month of April. This was the worst performance of just about any member of the dry bulk shipping industry (with the possible exception of DryShips, whose stock price undergoes double-digit percentage price swings on a daily basis).
Of course, not all cargo carriers are as volatile as DryShips (thank Poseidon). So what was it that caused Star Bulk to list last month?
That's an excellent question for which there's no 100% clear answer. In contrast to dry bulk shippers Diana Shipping, Eagle Bulk Shipping, and Scorpio Bulkers, all of which released significant news items in April, Star Bulk had very little to say last month. In fact, it issued no press releases whatsoever. (That will change this month, however, with the release of Q1 2017 financial results scheduled for May 24.)
In the meantime, my best guess as to what's moving the stock is the Baltic Dry Index (BDI), which tracks average carriage rates in the dry bulk shipping industry.
The BDI entered April at a near-three-year high of 1,297 points. Shipping rates dropped precipitously in the first week of the month, then spiked as high as 1,296 -- before dropping again. By the time the month was out, the BDI tipped the scales at only 1,109 points, down more than 14% from the start of the month. And seeing as the BDI is predictive of the prices that Star Bulk can charge for carrying cargo on its ships, Star Bulk Carriers' stock followed the BDI right down the drain.
As for what happens next, well, so far the news is not great. Recently quoted at 994, the BDI has fallen another 10% since the month of May began. Unless the BDI turns around quick, investors should not be surprised to see Star Bulk Carriers stock continue to sink along with it.