The price of one share of “The Eastman Kodak Company” skyrocketed on Wednesday, after news of a $765 million loan from the US government. The Kodak stock opened on Monday at $2.15, and closed on Wednesday at $33.20, registering a staggering 1,444% increase in two days. The loan was granted by the Trump administration under the Defense Production Act of 1950.
The Kodak stock price opened the week at $2.15 on Monday, trading barely over the $2 mark. Upon news of the government loan in the Tuesday after hours, the price shot up to a high of $46.03 on Wednesday as investors and speculators ran to purchase the stock. A staggering 1,444% in 2 trading days.
The daily trading volume also multiplied from 1.65M shares to an insane 284.67M shares on Tuesday and 276.02M shares on Wednesday. Kodak’s share quickly became the most popular traded stock on RobinHood, with 96,066 more users holding the stock compared to last week according to RobinHood tracking website Robintrack. The rise in Kodak’s stock price was so quick, it triggered 20 circuit breakers in a single trading day.
COVID-19: $765 Million in Trump Loans
Behind the rally is an announcement on Tuesday July 28. The Trump administration will offer a $765 million loan to the Eastman Kodak Company. In return, Kodak will start manufacturing ingredients for the pharmaceutical sector.
The decision came as the national medicine stockpile dwindled in response to the COVID-19 pandemic. The move will allow the US to reduce its dependence on foreign suppliers for its health sector. It’s the first loan of its type, and was given under the Defense Production Act of 1950.
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Allegations of insider trading
Despite the news being announced on Tuesday evening, the daily volume of the Kodak stock rose from 1.65M shares on Monday to 284.67M shares on Tuesday during the day. The unexplained increase of 17,153% in daily volume has started rumors about possible inside trading, a practice that is highly illegal. The price closed at $8.06 on Tuesday, equivalent to a 308% increase before information on the loan was broke to the public.
As with most FOMO scenarios, the price ended up correcting. The Kodak stock ended its tumultuous week at $21.85, less than half Wednesday’s high of $46.03, but still an impressive +1,062% over the entire week. The company’s Market Capitalization sits at a noteworthy $955.59M, just short of the $1B mark.
It remains to be seen why Kodak, historically a film making company, was chosen to be awarded the contract. A possible explanation could be their existing manufacturing infrastructure and chemical expertise. It is noteworthy that Kodak has been supporting the US COVID-19 efforts since the pandemic broke out earlier this year.