Please ensure Javascript is enabled for purposes of website accessibility

Why Kodak Stock Plummeted Today

By Joe Tenebruso – Aug 3, 2020 at 3:09PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Traders appear to be heading for the exits.

What happened

Shares of Eastman Kodak (KODK -1.22%) plunged on Monday, as the volatile small-cap stock surrendered much of its recent gains. As of 3:35 p.m. EDT, Kodak's stock price was down more than 30%.

So what 

Following news that it had secured a $765 million Defense Production Act loan to produce COVID-related pharmaceutical components, Eastman Kodak's shares soared as much as 2,757%. From its closing price of $2.10 on July 24, Kodak's stock price hit a high of $60 on July 29. 

A stock chart that rises sharply and then falls.

Eastman Kodak's stock was down sharply on Monday. Image source: Getty Images.

Kodak's stock, however, has pulled back violently since then. With its shares currently trading for about $15, Kodak has shed roughly three-quarters of its value from its recent highs.

Now what 

Questions are swirling as to why Kodak, which is primarily a technology company, was chosen to receive a loan related to pharmaceutical supplies, rather than a company with more experience in the field. Kodak's board of directors also made the questionable decision to grant executive chairman Jim Continenza options for 1.75 million shares of stock just before the deal was announced. Additionally, Kodak's convertible debtholders have chosen to convert their bonds into stock, which, while helping to strengthen the company's balance sheet, is diluting existing shareholders. 

In light of these factors, most investors would likely be best served by staying clear of Eastman Kodak's stock.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Eastman Kodak Stock Quote
Eastman Kodak
$4.84 (-1.22%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.