Back then, retail traders from the popular Reddit messaging board Wall Street Bets coordinated efforts to pump the price to a point that forced short-sellers to quickly close their positions. A significant volume of short-dated call options purchased by this same group also contributed to the price rise as brokers were forced to buy the underlying asset to hedge their exposure to these derivatives.
The rally hit a peak and then fell away, in the same pattern seen with other shorted stocks, including AMC Entertainment and GameStop. Castor Maritime peaked at $19.50 a share. It has since fallen to its current level of $2.29 a share (as of 8 September).
Ironically, the business’s fundamentals have experienced a significant improvement lately as management took advantage of the unexpected turn of events to sell shares in the open market to raise money for operations. The most prominent move came on 5 April 2021 when the company issued 192.3 million common shares at $0.65 each.
These share offerings, along with multiple agreements with lenders, including a recent $40.8m loan granted by a European bank, have allowed Castor to increase the size of its fleet to 26 vessels.
After these latest developments, what does the future hold for Castor Maritime? Find out in the following CTRM stock price forecast as we dig deeper into the company’s fundamentals and growth prospects.
Castor Maritime stock news
On 5 August, Castor Maritime reported its second consecutive quarter of positive bottom-line profitability. Net income landed at $6.5m during the three months to 30 June, following a previous net income of $1.1m in Q1 2021.
For the six months to 30 June 2021, the company produced revenues of $28.8m and net income of $7.6m.
In regards to these positive results, the company’s Chief Executive Petros Panagiotidis, stated:
The company informed investors that on 14 June it entered an agreement with Maxim Group LLC to sell up to $300m worth of stock through periodical at-the-market equity offerings. Since then, $9.7m in net proceeds have been raised, meaning that the company might continue to sell shares if market conditions remain favorable.
Interestingly, the company reported that during the second quarter of 2021 it operated an average of 16.2 vessels, earning a daily average time charter equivalent (TCE) of $14,381 – a 58% jump compared to the daily average TCE the company reported for the same period a year ago.
Castor Maritime stock analysis: CTRM technical outlook
CTRM stock experienced a significant uptick back on 5 August after the company reported a solid second quarter of 2021. On that day, CTRM’s share price went up nearly 24% to $2.50 a share. Last Friday, the price was settled at $2.30.
The CTRM stock chart above shows that this jump occurred only a few days after the price broke a falling wedge pattern – typically considered a bullish formation. The break was accompanied by above-average trading volumes as a total of 42.5 million shares exchanged hands on 5 August – almost 10 times the 10-day average for CTRM (4.2 million shares).
Momentum oscillators have also been surging to positive levels, with the Relative Strength Index (RSI) on an uptrend, while the Moving Average Convergence Divergence (MACD) has moved to positive territory on the back of steadily rising positive histogram readings.
Moving forward, the combination of this break of the falling wedge on the back of high trading volumes and these positive momentum readings are supporting a bullish CTRM stock prediction.
But the stock price cannot be predicted with 100% accuracy. Any opinions should not be taken as recommendations to invest in the stock. Investors should always conduct their own research.
CTRM fundamental analysis
The first factor to consider in any CTRM share price analysis is what the management’s $300m upcoming at-the-market offerings could do to the company’s market capitalisation.
The price at which shares are offered will be important to assess the degree of dilution that existing shareholders may experience as a result of these direct sales. Current market capitalisation is around $214m, which means that the management plans to raise nearly 1.5 times the company’s current market value.
It’s unclear how much of these shares have already been sold since 5 August – back when the latest outstanding balance was announced – yet every sale may depress the share price, considering that at least 100 million shares will have to be sold to raise that much money.
Since the average daily volume of Castor Maritime is somewhere between 3 to 4 million shares, it would be easy for market participants to notice any jump in volumes as a signal that the company is actively participating in the session.
Once the dust settles and these sales are finalised, the company could emerge with at least $250m more in cash in its balance sheet. It would be interesting to see where its market capitalisation lands before assessing how dilutive this move was.
Moving forward, Castor Maritime appears to have taken advantage of the pandemic-induced tailwind as supply bottlenecks allow the company to increase prices, as indicated by the significant jump that its daily TCE rates experienced during the second quarter.
Meanwhile, at its current market capitalisation of $214m, CTRM is trading at less than 4 times its forecasted revenues for 2021. (For the purpose of this article, that forecast is based on a simple run-rate of the company’s $28.8m first-half revenues, which results in estimated full-year revenues of around $58m.)
This valuation multiple is not particularly stretched if one considers that the company has a relatively small long-term debt burden of $37m, covered by $40m in cash and equivalents, as reported on 5 August 2021.
Castor Maritime (CTRM) stock forecast
The Baltic Dry Index measures the medium price paid for transporting raw materials across the seas through 26 different routes.
If supply bottlenecks persist, the company’s elevated number of active vessels may continue to lift revenues to an extent that the current market capitalisation may not be fully pricing.
As a result, a bullish CTRM stock outlook could be viewed as reasonable if it's based on the possibility that the market is undervaluing the company’s ability to perform positively on the back of the current tailwind.
Moreover, the management has proven its capacity to produce positive bottom-line results, having achieved that goal in the past two quarters.
That said, it is important to note that Castor Maritime is a relatively small company. Its stock is a high-risk investment. If you wish to invest in CTRM stock, make sure you understand the risk of investing in up-and-coming businesses.
This opinion about Castor Maritime’s fundamentals should not be considered investment advice. Investors are encouraged to perform their own due diligence on the stock before making a decision to buy or sell.
Note that if you trade Castor Maritime with contracts for difference (CFDs), you can try to benefit from the stock’s price movement in any direction by opening a long or a short trade.
CFDs are leveraged instruments, meaning you can open a larger position with a smaller initial amount of money. Although leverage is designed to boost your profit, it can also augment your loss. Mind the risk.
Track the CTRM stock live on our interactive chart and spot the best opportunities for a potential trade.
Frequently Asked Questions (FAQs)
Castor Maritime is a micro-cap company that is very susceptible to changes in overall market conditions and potential industry-specific headwinds. As a result, investors should fully understand the risk of exposing their portfolio to these types of companies before investing.
Nobody can accurately foretell how the stock price of a company will behave. However, algorithm-based CTRM stock forecasts for 2021-2025 from Wallet Investor have predicted a surge in CTRM’s price to around $5 a share by the first half of 2022.
Analysts surveyed by TipRanks are not so sure about the positive Castor Maritime stock price forecast, as of 7 September 2021. The stock got an “Underperform” smart score rating, based on negative investors’ sentiment and technical analysis data.
Another algorithm-based service Gov Capital also shared negative views on the CTRM stock prediction. According to their data, the stock can end up 2021 at $0.89 and continue moving down to $0.24 by the end of February 2022.
Investors can trade Castor Maritime stock via the contracts for difference (CFDs) offered by Capital.com. The good news is that, with CFDs, you can take either long or short positions on the stock depending on your directional forecast.