The U.S.-traded shares of micro-cap stock DryShips spiked a staggering 64 percent in pre-market trade before being halted Wednesday, adding to an explosive surge that began last week.
At the beginning of the month, the company implemented a reverse stock split in which every 15 shares of the firm's issued common stock was combined into one issued share of common stock, reducing the number of such shares to about 1.1 million from more than 17 million, according to a press release.
Shares of DryShips are up more than 1,300 percent over the last 5 trading days, but are down 72 percent for the year so far.
Trade in DryShips shares was still halted in Wednesday afternoon, while shares of other very small shipping stocks were up significantly in midday Wednesday trade.
Michael Webber, senior analyst and managing director for equity research at Wells Fargo Securities, attributed the sharp moves to several factors.
"We think this micro-cap outperformance started with a thematic, risk-on Trump rotation, followed by retail momentum and [multiple] short squeezes, with an ever increasing push from quant driven momentum," he said in a Wednesday note. He said he expected the stocks to likely retain a small part of their gains "as longer-term prospects have likely improved to at least some degree."
A short squeeze occurs when traders buy back shares to exit short positions, or bets of a share price decline.