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Tons of traders noticed $SHIP after it "skyrocketed" 1600%+ after a 16:1 reverse split on June 30th. Now many OG traders know SHIP is a complete dumpster fire of a stock, but here we go newbies. It’s time to see why Seanergy #SHIP is a highly risky "investment".
First thing you need to know right off the bat is that I don’t care where this stock goes and I’m not a licensed stock broker so this is all my personal opinion. I just play SHIP either way, but I would never hold a $SHIP position long term.
If you’re short, you have no idea when the next pump is going to come, and when you’re long it usually just slowly bleeds out until the next pump. So I just try to ride the waves day trading/scalping and collecting profits.
As mentioned, SHIP is a dumpster fire. It's a pump, dilute, dump, R/S machine. It’s hard to find they exact number of offerings they’ve had, but let's just keep it to the standard pump and dump cycle with 1 offering per R/S, which is 4.
SHIP has had 4 reverse splits in its history.
Jan 04, 2011 – 15:1
Jan 08, 2016 – 5:1
March 20, 2019 – 15:1
June 30, 2020 – 16:1
10,000 shares of SHIP purchased in 2010, would now be 0.83 shares and your investment would have an overall return of -99.87%. Yes. -99.87%.
Jan 04, 2011 – 15:1
Jan 08, 2016 – 5:1
March 20, 2019 – 15:1
June 30, 2020 – 16:1
10,000 shares of SHIP purchased in 2010, would now be 0.83 shares and your investment would have an overall return of -99.87%. Yes. -99.87%.
What about their YoY financials? SHIP has had two profitable years in the last decade. 2014 & 2013. Every other year they have had a loss. In 2019 they had an $11M loss YoY despite the BDI and Capesize rates being at 5 year record highs.
Their debt is also $29M and was refinanced this past week for a further 5 years. Not really what you want to see in company that just had a R/S to “attract institutional investors”.
There's the quick history about $SHIP, but now let’s hit the main points that people are using as examples why $SHIP will reach $4, $8 and $44 price targets. Let’s start with the first one, the BDI (Baltic Exchange Dry Index) and Capesize rates (how much vessels charge per day)
The Baltic Dry Index, is issued daily by the London-based Baltic Exchange. The BDI is a composite of the Capesize, Panamax & Supramax Timecharter Averages. It's reported around the world as a proxy for dry bulk shipping stocks and as a general shipping market bellwether (Wiki)
People are going wild because the BDI is increasing DoD which should bring in huge profits. Usually summer months are most profitable & winter months being much less profitable. BDI is currently sitting at 1,894 while capesize rates are sitting around $33,000+ per day.
In September 2019 the BDI index hit a 5y high of 2500+ and capesize rates had also peaked at $38,000 per day in early September 2019. Rates retreated to around $18,000 per day by the third week of November however.
SHIP for the 3Q in 2019 had net revenues of $747K according to their earnings report. During the month of Sept 2019 SHIP stock price went from $9.64 to $7.70, a 20% decrease. But, it did see a rebound in the next Q with a bounce to $13.28 in Oct and finishing the year at $8.73.
So despite record highs in both Capesize and BDI Index rates & having a fleet utilization rate of 85%, SHIP still had a poor quarter earning a measly $747,000. During 5 year record highs for both metrics. Ouch.
Now I know what you’re thinking. Holy shit, SHIP was trading at $9.64 last year! FOR SURE IT WILL GO BACK! RIGHT?! RIGHT?!
It might, but probably not and this is why.
It might, but probably not and this is why.
With historical pricing charts, R/S are priced in. What do I mean? The reverse split was 16:1 but historical charts show that SHIP opened on June 29, 2020 at $2.67, which is wrong. Divide 2.67 by 16 and you get the correct number of $0.166.
Any historical price on the SHIP chart now needs to be /16 to reach the correct price before the June 30th R/S. So that $9.64 that SHIP was trading at least year is actually $0.602 at the time.
Why is this important?
Why is this important?
Because SHIP is a volatile stock. When price targets are calculated for volatile stocks, they typically use technical and fundamental price history instead of the traditional P:E ratio.
So, if analysts are using historical charts to calculate a PT you need to divide that number by 16 because of the R/S. That PT of $4 is now $0.25c and the $8 PT is now $0.50c. A $44 PT is also making the rounds, and following the same path that becomes $2.75 (which is realistic).
Now where did these $4 and $8 price targets come from? Two analysts. Poe Fratt from Noble Financial & Tate Sullivan from Maxim Group. So, let's look at their records individually.
Poe Fratt has a PT of $8. Their overall PT success rate is 30% and an average return of –17.2%. Diving deeper tho, Poe has been wrong on every single SHIP PT going 0/12 with an average profit of –66.6%. OUCH. They're also rated #13,992 out of 14,199 overall experts. 
Tate’s overall record is a 35% success rate with an average return of –8.8%. Their PT history for SHIP has also been abysmal going 1/14 and having an average profit margin on SHIP PT’s at –53.1%. Tate is also rated #13,982 out of 14,199 overall experts. OUCH.
Now since they are most likely using historical pricing to calculate their PT's we have to account for that and /16.
$4 = $0.25 & $8 = $0.50
If I told you to buy stock at $2.15 with a PT of 0.25c would you buy it? No you wouldn’t, & based on their track records neither would I.
$4 = $0.25 & $8 = $0.50
If I told you to buy stock at $2.15 with a PT of 0.25c would you buy it? No you wouldn’t, & based on their track records neither would I.
Could SHIP management change course and make the company profitable for shareholders in the short term and long term? Could SHIP have a massive quarter being released on their next financial report? Of course, they can...
If you look at the writing on the wall, history seems like it will repeat itself. So here comes another pump, dilute, dump and R/S cycle that will let old bag holders dump on the news one as they have done for the past 12 years of SHIP’s history.
When will that happen? I have no idea. But considering that their R/S are increasing in frequency I wouldn't be surprised to see another offering in the next 3-12 months due to "Covid-19 related struggles".
This has been my presentation. Stonk you for coming!
This has been my presentation. Stonk you for coming!
