Why is Teekay Corporation (TK) Stock in Free Fall?


Shares of Teekay Corporation (NYSE:TK) are down over 50% this morning shocking many of the company’s investors. The stock which closed trading yesterday at $17.48 opened trading today down considerably at $11.71 before continuing its free fall over the first hour of trading.

This significant shareprice devaluabtion seems to be stemming from an announcement by the company earlier today that they would be slashing their dividend by 90% from a quarterly rate of ).55 per share to just $0.055 per share. The decision was made by the board of directors for Teekay Corporation (NYSE:TK) in order to help fund the debt reduction and future projects of the company.

“Teekay Corporation is committed to being a supportive Sponsor of our two master limited partnerships,” commented Peter Evensen, Teekay’s President and Chief Executive Officer. “Although it is painful in the short-term to have to temporarily reduce Teekay Corporation’s dividend, management and our Board of Directors believe Teekay and its shareholders will achieve greater long-term value creation by focusing on enhancing the value of our ownership interests in Teekay Offshore and Teekay LNG and being in a better position to support their continued growth and distributable cash flow generation.”

The stock has fallen 55.97% or $9.79 following this negative news, hitting $7.7 per share. About 5.81M shares traded hands or 547.83% up from the average. TK has declined 63.65% since May 14, 2015 and is downtrending. It has underperformed the S&P500 by 59.97%.

From a total of 5 analysts covering Teekay Corporation (NYSE:TK) stock, 4 rate it a “Buy”, 0 a “Sell”, and 1 a “Hold”. This means that 80% of the ratings are positive. The highest target price is $57 while the lowest target price is $38. The mean of all analyst targets is $47.40 which is 515.58% above today’s ($7.7) stock price. Teekay Corporation was the topic of 5 analyst reports since August 7, 2015 according to the firm StockzIntelligence Inc.

Teekay Corporation is a provider of crude gas and oil marine transportation services. The company has a market cap of $1.20 billion. The Firm also offers offshore oil production, storage and offloading services, primarily under long-term, fixed-rate contracts. It has 18.97 P/E ratio. The Firm is engaged in the liquefied natural gas (LNG) and liquefied petroleum gas (LPG) shipping sectors through its subsidiary Teekay LNG Partners L.P. (Teekay LNG).