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Kodak Share Price Jumps Over 380% – Is it Still A Buy?

Kodak share price gains over 380% after the US administration’s sign a $765 million loan to the company to produce pharmaceutical ingredients in generic drugs due to the COVID-19 pandemic.

The company will be transformed into a pharmaceutical company under the Defense Production Act (DPA). The new company will produce generic pharmaceutical ingredients to reduce USA dependency on drug imports. President Trump said that his administration would try to bring back jobs to the country and make the USA a top medical manufacturer.

Kodak produces already materials for some pharmaceutical companies, so the new mission is just an expansion of its production. The company plans to expand its production facilities in New York and Minnesota and hire about 350 employees while it will create 1,200 additional indirect jobs. The company will need around three years to build the new production line and reach full capacity.

Is Kodak a Buy? 

Kodak reported a 111 million loss on 267M revenues a 10% drop in the first quarter of 2020. Kodak’s stock market capitalization was $115 million before the Government’s announcement, and now the capitalization has reached 1,631B after the two day’s rally. The stock is over 1600% higher in the last five days and is 705% higher since the beginning of the year.   

Investors should be cautious in investing in Kodak and should take into consideration several factors. 

It is unclear what will be the revenue stream after the transformation of the company, and only aggressive speculators can jump now into the stock as we can’t have a clear view of the future earnings and revenues. 

The new market that the company enters is crowded with strong competitors around the globe, but analysts believe that the specific market has enormous growth potential in the future after the coronavirus outbreak. 

Kodak administration has failed many times in the past, and finally, the company went bankrupt in 2012; after restructuring went public again in 2013 at the price of $25.50. Kodak had another failure in its 2018 venture KODAKCoin.  

Kodak Share Daily Chart