Kodak just received a US$756 million [AU$1.06 billion] loan from the U.S. government, and the massive stock rally has analysts skeptical about it.
With no prior pharmaceutical experience, the film and camera company will be challenged in producing medical equipment for its citizens.
— Lou Dobbs (@LouDobbs) July 28, 2020
Invoking the power of the Defense Production Act, President Donald Trump has assigned Kodak to be one of the top medical manufacturers.
This year, the POTUS also had tensions with 3M for violating the Defense Production Act, and it looks like he has found a new ally.
Kodak top executive lands deal on an “understanding”
As per Reuters, Eastman Kodak executive chairman and CEO James Continenza was granted options for 1.75 million shares due to an “understanding” with its board that wasn’t in his employment contract, nor it was publicly disclosed.
The options deal happened before the official loan announcement of the Trump administration. Now the shares are worth over 500% since the last price on July 27 at $2.62 per share.
MSNBC’s Stephanie Ruhle also got skeptical over the Kodak deal, for there are a lot of pharmaceutical companies in the U.S. where the POTUS can exercise the Defense Production Act.
Where are lawmakers?
Where is the SEC?
Exclusive: Eastman Kodak top executive got Trump deal windfall on an 'understanding' – Reuters https://t.co/3gOyxQtjHZ
— Stephanie Ruhle (@SRuhle) August 2, 2020
Another dangerous speculation lies ahead
The recent rise of Kodak reminds traders and investors of the bullish rally of companies this year that filed for bankruptcy like Hertz and Whiting Petroleum.
President and CEO of Thornburg Investment Management Jason Brady said in an email to CNN Business:
“The market is more driven by retail [investors] in the short term than it has been in some time.”
As per Robintrack, a site where it records most actively traded stocks in Robinhood, Kodak is currently part of the top 100 traded stocks ranking at 84.
With the recent Dogecoin hype that happened this year, Robinhood retailers may be either taking or holding profits off Kodak.
Featured image courtesy of analogicus/Pixabay