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Why Kodak Stock Jumped Today

By Joe Tenebruso – Aug 6, 2020 at 1:52PM

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President Trump's executive order could provide a boost for the company's fledgling pharmaceutical business.

What happened 

Shares of Eastman Kodak (KODK -0.71%) climbed on Thursday, after news broke that President Donald Trump will sign an executive order requiring the federal government to purchase drugs and other medical supplies deemed "essential" from U.S. companies. As of 12:30 p.m. EDT, Kodak's stock was up 7% after rising as much as 17.4% earlier in the day.

So what 

Eastman Kodak now stands to benefit from such an order. The company was recently awarded a $765 million Defense Production Act loan from the U.S. government to produce coronavirus-related pharmaceutical materials. Eastman Kodak is using the funds to launch Kodak Pharmaceuticals, which will produce pharmaceutical components deemed critical by the Food and Drug Administration and Department of Defense. 

A stock chart that rises sharply then begins to fall.

Eastman Kodak's stock rallied on Thursday. Image source: Getty Images.

Kodak's loan -- and President Trump's executive order -- are intended to strengthen the country's ability to respond to health-related emergencies, such as the COVID-19 crisis. "We are dangerously over-dependent on foreign nations for our essential medicines, for medical supplies like masks, gloves, goggles and medical equipment like ventilators," White House trade advisor Peter Navarro said on Thursday. 

Now what

While President Trump's executive order could certainly be a positive for Kodak, investors should remain cautious regarding its stock. The company is reportedly under investigation by the Securities and Exchange Commission for disclosures related to its loan announcement and possible insider-trading activity. Moreover, Kodak's stock is highly volatile and has surged and plummeted repeatedly in recent days. There are lower-risk and likely better stocks to choose among, such as the 10 stocks referenced below. 

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.

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