KODK Stock: Eastman Kodak Rockets 70% on Committee Findings

Eastman Kodak (NYSE:KODK) is ready to prove the haters wrong. Investors today are chasing up KODK stock more than 70% — ready to close out the Kodak saga. Why? An independent committee hired by the board has just determined that Eastman Kodak committed no crimes.

two Kodak (KODK) branded photo rolls

Source: Rizhka Nazar / Shutterstock.com

This drama all started back in July, when the once iconic photography company made a sharp pivot. Eastman Kodak — along with President Donald Trump — announced a new business model. The company received a $765 million loan as part of the Defense Production Act to retool factories and begin production of generic drugs.

At the time, this checked a lot of boxes for investors, and shares skyrocketed more than 200% on the news. Trump has touted a plan to put America first and bring drug production back to the U.S. The loan gave Trump a way to check off that box. Eastman Kodak, a struggling company, would also benefit.

But between the lines was another huge catalyst. One of the drugs Eastman Kodak was set to manufacture was hydroxychloroquine, an anti-malaria drug. Trump has long proclaimed the abilities of hydroxychloroquine to fight the novel coronavirus, although health experts disagree. The U.S. Food and Drug Administration actually revoked its emergency-use authorization after finding that the drug was not effective in treating Covid-19 and could potentially trigger adverse side effects. This FDA revocation has not deterred Trump.

So, while the role of hydroxychloroquine and Kodak in fighting the coronavirus was unclear at the time, investors loved the idea of it. Corning (NYSE:GLW) and Fujifilm Diosynth Biotechnologies, a subsidiary of the photography rival, had already received similar grants for pandemic-related tasks. Corning will help supply glass vials as the vaccine race heats up.

KODK Pops on Committee Findings

The market soon soured on Eastman Kodak, however. Investigators from the U.S. Securities and Exchange Commission and Congress questioned the timing of the deal, including of option grants given to Executive Chairman Jim Continenza. A high-profile stock donation to the Congregation Chemdas Yisroel also raised eyebrows. In response, the U.S. government put the loan on pause.

As you can imagine, KODK stock headed south under scrutiny.

That’s why the news Wednesday matters so much. Investors are excited that the committee believes Eastman Kodak is in the clear. Sure, investigators pointed to several flaws in the corporate governance model, but they are not accusing anyone of insider trading or criminal activity.

Investors today are also likely celebrating the potential for Eastman Kodak to receive the loan and begin its renovations. If the photography company can get back in the coronavirus race, KODK stock could keep climbing higher.

On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Sarah Smith is a Web Content Producer with InvestorPlace.com. 

Article printed from InvestorPlace Media, https://investorplace.com/2020/09/kodk-stock-eastman-kodak-rockets-70-on-committee-findings/.

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