Eastman Kodak Company Stock (KODK) Surges Over 1,600% Due To Generic Drug Ingredient Pivot

By Amit Chowdhry ● July 30, 2020
  • Eastman Kodak Company (NYSE: KODK), the company that was known for producing camera-related products since 1988, announced this week that it was pivoting towards producing generic drug ingredients

Eastman Kodak Company (NYSE: KODK), the company that was known for producing camera-related products since 1988, announced this week that it was pivoting towards producing generic drug ingredients. And the stock priced surged over 1,600% after it was announced that Kodak received a government loan for $765 million under the Defense Production Act to produce the generic drug ingredients.

This deal will enable America to depend on the domestic production of pharmaceutical products in the midst of the pandemic. The Kodak facilities in Rochester and St. Paul, Minnesota will be deploying the new pharmaceutical arm of the company — which will now be called Kodak Pharmaceutical.

Kodak is going to focus on making essential ingredients that the Food and Drug Administration identifies as having a national shortage.

“Kodak will now produce generic active pharmaceutical ingredients, which is a big deal. Using advanced manufacturing techniques, Kodak will also make the key starting materials that are the building blocks for many drugs in a manner that is both cost-competitive and environmentally safe. We’ll be competitive with almost all countries, and soon with all countries,” said President Trump during a press briefing.

This is quite a turnaround from the last few years as Kodak struggled to find a turnaround strategy. The company emerged from bankruptcy in 2013 and struggled to find a way to survive over the past few years.

As the company’s stock price jumped, the market cap went from $150 million to a high of $2.6 billion when it hit $60 per share. The stock especially gained attention from active traders on the Robinhood app. Trading volumes went from 1.6 million on Monday to over 270 million on Tuesday and Wednesday.

The New York Stock Exchange ended up halting the trading of Kodak shares 20 times on Wednesday as the automated “circuit breakers” kicked in to prevent extreme stock price swings.

Kodak Executive Chairman and CEO Jim Continenza is expected to greatly benefit from the stock rally. Continenza owns 650,000 Kodak shares, 3.8 million stock options, and phantom stock — which could be valued at up to $200 million. That is over 150 times what the value of those stock options and shares were worth as of Monday.

Continenza had purchased nearly 100,000 of his Kodak shares this year, including 46,737 shares on June 23rd for only $2.22.