Investors in the former photography giant
endured unreal stock market extremes in recent weeks. Now, a government tweet sent Friday evening could mean that the wild trading will continue Monday.
The “letter of interest” in the tweet refers to a $765 million loan Kodak (ticker: KODK) will use to start a new business segment producing pharmaceutical ingredients.
Kodak isn’t in the drug business, and the surprise decision sent Kodak stock up 1,167% in two days beginning July 28. Shares briefly touched $60, before trading back to $14.88, down more than 75% from their 52-week high set on July 29.
Investors, after the initial surge of euphoria, had to decide how to value the new pharma business. What’s more, a stock pop on July 27, before the loan decision was officially disclosed, brought scrutiny from the Securities and Exchange Commission and government officials.
The scrutiny led Kodak to form a board level committee to look at the news disclosure process. News of the new committee appears to have been disclosed just before the DFC tweet.
The DFC followed up in a subsequent tweet that the agency remains “committed to working together with other government agencies to address critical shortfalls in America’s pharmaceutical supply chain.”
Many pharmaceutical active ingredients, or APIs, are manufactured overseas.
Kodak declined to comment on the DFC tweet. DFC personnel weren’t immediately available to comment.
The DFC’s mandate was recently expanded—after President Trump invoked the Defense Production Act in March—to reshore production of strategic resources, such as APIs.
The original letter of interest signaled that Kodak has passed the DFC’s initial screening. The process to finish the loan award isn’t completely clear and—now—whatever steps followed the initial screening appear to be on hold.
Kodak stock wasn’t trading after hours on Friday. Investors can expect volatility Monday. Year to date, Kodak stock remains up 220%, far better than comparable returns of the
Dow Jones Industrial Average
over the same span.
Write to Al Root at firstname.lastname@example.org