Kodak Stock $KODK gained 1600% in two days and now is dropping, is it a stock to buy?
The stock went up after kodak received a $765 million loan from the US government to make pharmaceuticals. The announcement was made by president Trump himself.
But Kodak is not really a pharmaceutical company. Kodak is mostly known for its cameras. Kodak also makes sensors, printers, inks (that's their chemical business). It is the chemical business which is now transforming into a pharmaceutical company. But we cannot really call Kodak a chemical company. It is only a small part of their current business.
Kodak failed to capitalize on the rise of digital cameras and filed for bankruptcy in 2011, only to come out of bankruptcy in 2013. Kodak is still struggling as they are still losing money but they have quite good balance sheet. Nevertheless, we should not forget that this loan is still a liability.
There's something very fishy in all of that. A camera company with a market cap of $90 million receives a $765 million loan to make drugs. This is equivalent to Apple receiving a $765 million loan to make spaceships. Peter Schiff even called Donald Trump a socialist for that.
This new business venture of Kodak is still new and right now, we cannot say if it is a good investment or not. This is not the first time, Kodak was involved in something unusual. In 2018, Kodak made the announcement that they are going to launch a cryptocurrency called the KodakCoin. It was not launched and the stock price fell after that.
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