Send me real-time posts from this site at my email

Why Eastman Kodak Stock Soared 47.5% in September

What happened

Shares of Eastman Kodak (NYSE: KODK) jumped 47.5% in September, according to data from S&P Global Market Intelligence. The stock soared after an internal investigation into potential insider trading found no evidence suggesting criminal wrongdoing.

^SPX data by YCharts.

The law firm Akim Gump Strauss Hauer & Feld, which Kodak hired to investigate potential securities trading violations, announced on Sept. 16 that it had found no evidence of insider trading. The favorable investigation findings triggered a big pop for the company's stock, but it's not clear that Kodak is out of the woods yet.

Image source: Getty Images.

So what

Kodak stock soared 878.8% in July after news that the photography company had secured a $765 million government loan to produce chemicals for potential use in drugs intended to treat COVID-19. Allegations of insider trading and reports that the Securities and Exchange Commission had launched an investigation into how the company had received the loan then prompted substantial sell-offs, with the company's share price falling 72.6% in August. The SEC was also reported to be investigating the timing of the loan's announcement; Kodak CEO Jim Continenza and other executives had received stock options the day before the loan was announced.

September's announcement from Kodak's lawyers spurred a rebound for the stock. While the special committee's investigation did not find evidence of illegal activity, the law firm did indicate that the company erred in granting its CEO stock options immediately leading up to the loan agreement being signed and announced.

Now what

Growth potential in chemical production has created new excitement for Kodak stock. The company's camera film and printing business looked poised for continued declines amid pressures created by the growth of digital photography. The company had a chemicals production segment even before securing the loan, but the pivot signals that chemicals could emerge as the business' core focus and gives Kodak new (albeit still speculative) growth avenues.

10 stocks we like better than Eastman Kodak
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Eastman Kodak wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of September 24, 2020

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue