Eastman Kodak Stock Hits Multi-Year Highs: Is it Still a Buy?

One of the biggest developments on Tuesday was the rally in Eastman Kodak Company (NYSE:KODK). The company announced yesterday that it is going to get into the medicine production business and that saw its stock soar by as much as 203%. It came as a surprise in the markets and the rally in the Kodak stock was perfectly understandable.

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Reportedly Planning To Dip Its Toes Into Drug Production

The company announced that it was going to get a loan of as much as $765 million from the United States government to start its new medicine manufacturing business. In addition to that, Kodak revealed that it is going to have a quarter of a century to pay off the loan. 

That being said, investors also need to note that the company is not moving away completely from its photography business. The medicine production business is going to make up between 30% and 40% of the company’s overall business. According to initial reports, it has emerged that Kodak is going to be involved in the production of hydroxychloroquine, a product that could be used to treat patients suffering from coronavirus.

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However, it has had its share of controversies and that is something that investors should keep in mind. However, the news about the switch in business has brought the Kodak stock into sharp focus. 

After the news broke, there was frenetic trading on the Kodak stock and as many as 231 million shares had been traded at one point. The volume is massive compared to the average daily volume of only 310000 shares. 

Now, the latest news seems to have been welcomed by the market but now everyone is impressed by this radical move from Kodak. Jim Cramer of TheStreet was not impressed with the company’s decision to produce hydroxychloroquine. He stated that their numerous tests have been conducted on hydroxychloroquine and it has been found to be ineffective on COVID 19. 

That being said, it is also important to note that the company has stated that it is going to try and produce those ingredients that have been classified as critical by the United States Food and Drug Administration. The funds in question are going to be disbursed to the company by the United States International Development Finance Corporation (DFC). The program is part of the United States President Donald Trump’s Defense Production Act. 

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The company had struggled with its photography business for many years after having been a dominant player for decades. Back in 2012, the company had even been forced to file for bankruptcy. Later on, Kodak focussed on commercial printing but that did not quite make the stock move either. The latest development is interesting in a number of ways and investors could consider keeping an eye on the company’s progress.

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