TOPS - Top Ships stock price is soaring but dilution risks remain
2023-11-24 12:31:54 ET
Top Ships (NASDAQ: TOPS) stock price has bounced back this month after it regained Nasdaq listing compliance. The once-popular stock has risen to $9.65, its highest point since August 23rd. It has jumped by over 73% from the lowest point in October, giving it a market cap of over $14.78 million.
Top Ships is a fallen angel in the shipping industry. At its peak, the company had a market cap of over $146 million, meaning that its investors have lost over $100 million in value since February 2021.
The stock has underperformed even as the company did modestly well. A look at its income statement shows that its total revenue jumped from $41 million in 2018 to over $80.7 million in 2022 and $83 million in the trailing twelve months (TTM).
It has also become a profitable company. Its annual loss peaked at over $22.8 million. According to SeekingAlpha, its total revenue in 2022 stood at $18.9 million and $16.1 million in the TTM.
Top Ships stock chart, market cap, outstanding shares
The challenge for Top Ships is that it has a mountain of debt. In its recent report, the company said that its total long-term debt stood at over $193 million while the current portion of the long-term debt stood at $34.9 million. As a result, according to MacroAxis , the company has a 66% probability of bankruptcy, higher than its peer companies.
The other challenge for Top Ships investors is that it is a dilution machine. According to TradingView, the company has over 1.6 million outstanding shares, up from 140k in 2021. This means that long-term shareholders have seen their holdings diluted over time.
Top Ships has come close to being delisted in Nasdaq several times. The most recent period was in October when the company was forced to do another reverse split, this time of 12 to 1. It has done about 7 reverse splits in the past few years.
Past performance is not always a good indicator of future returns. However, in the case of TOPS, there are high chances that the recent cycle of shareholder dilution and stock splits will continue. This makes it a risky stock to invest in, especially for people with a long-term view.
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