Where Is Kodak Stock Headed In 2021?

In July, KODK caught the limelight as it struck a potential $765 million loan deal with the U.S. government to build a new pharmaceutical-ingredient arm and produce hydroxychloroquine, an anti-malaria drug that was then being touted as a COVID-19 cure. The potential loan drove up the stock from $2.62 on July 27 to a high of $60 on July 29. However, it soon came to light that before the deal was made public, members of the company’s  management had awarded themselves millions of shares in stock options. This led to multiple allegations of “insider trading” and “unauthorized disclosure of material, nonpublic information.” Consequently, the deal was kept on hold by the US International Development Finance Corp (IDFC) in August, calling for an investigation.

Buy & Hold Grade: F

In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers , KODK is not positioned well. The stock is currently trading 15.1% below its 52-week high of $255.66.

Looking at the past three years, the stock has grown more than 165%. However, KODK’s top-line and cash flows have declined at a CAGR of 11.9% and 34.9%, respectively, over this period.

In November, KODK admitted that an internal error had allowed former executives to make more than $5 million selling stock options they did not  own. “The lack of proper controls allowed for the “unauthorized issuance” of common stock when previously forfeited stock options were exercised.”

Regarding the loan deal, the IDFC recently concluded that there was no wrong-doing and that it had  found no evidence of conflicts of interest involving agency employees or any misconduct on the part of the agency’s officials. Nevertheless, , a  review is still underway as the SEC and members of Congress are still performing their due diligence regarding the disclosure of the deal and timing of the executive stock compensation.

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