SFL Corp (NYSE: SFL) saw its stock price plummet 5.81% in pre-market trading on Tuesday following the release of its second-quarter 2025 earnings report. The shipping company's decision to cut its quarterly dividend and face operational challenges led to the significant drop.

Despite reporting a net income of $1.5 million, or $0.01 per share, which beat analyst expectations, SFL announced a reduction in its quarterly dividend from $0.27 to $0.20 per share. This move, aimed at adjusting to changes in cash flow, disappointed investors. Additionally, the company's adjusted EBITDA of $104 million fell short of analyst estimates, further contributing to the negative sentiment.

SFL's CEO, Ole B. Hjertaker, highlighted ongoing challenges, particularly with the company's legacy drilling rig Hercules. Market uncertainty and oil price volatility have delayed new employment opportunities for the rig, impacting near-term financial results. Moreover, while the company has been actively renewing its fleet by selling older vessels, this strategy has increased available capital for new investments but reduced short-term cash flow generation. These factors, combined with the dividend cut, appear to have triggered the sharp pre-market decline as investors reassess the company's near-term prospects and income potential.