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Why Castor Maritime Stock Crashed Today

By Joe Tenebruso - Apr 5, 2021 at 2:38PM

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Investors are about to have their ownership stakes significantly diluted.

What happened

Shares of Castor Maritime (CTRM -3.90%) plunged on Monday after the shipping company announced the pricing of its latest stock offering. As of 2:10 p.m. EDT, its stock price was down 20%.

So what

Castor Maritime will sell roughly 192.3 million shares to institutional investors at a price of $0.65 per share. The offering will raise about $125 million, before transaction-related expenses. The stock sale is expected to close on Wednesday.

A downwardly sloping stock chart

Castor Maritime's stock price fell sharply on Monday. Image source: Getty Images.

The shipping specialist also agreed to sell warrants as part of the deal. The warrants will give investors the right to buy up to an aggregate of 192.3 million shares at a price of $0.65 per share within the next five years.

Now what 

Castor Maritime's stock price closed at $0.74 on Thursday, so shareholders were likely displeased by both the pricing of the share sale and the substantial dilution of their ownership stakes it will bring about. The offering will increase the company's share count by roughly 27%. 

However, the cash it raises from the offering should allow Castor Maritime to continue to expand its fleet. The shipping services provider has ramped up its vessel purchases in recent months, in an attempt to take advantage of attractive deals during the COVID-19 crisis. 

"Our focus remains on deploying our capital and growing our fleet through timely acquisitions of vessels across shipping segments," CEO Petros Panagiotidis said in March. 

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Castor Maritime Inc. Stock Quote
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