Please ensure Javascript is enabled for purposes of website accessibility

Why Eastman Kodak Stock Rocketed 83% This Morning

By Rich Smith – Sep 16, 2020 at 12:10PM

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

A company-sponsored probe into possible insider trading sees no wrongdoing, but it's not time to celebrate just yet.

What happened

Shares of erstwhile camera-film giant Eastman Kodak (KODK 1.49%) exploded out of the gate this morning, rocketing 83% higher before pausing to catch their breath and retracing a bit. As of 11:20 a.m. EDT on Wednesday, however, the stock was still up quite a lot at 37.8%.

And all because of something Eastman Kodak said.

Auditor in business suit examines financial records with a pen and a magnifying glass

Image source: Getty Images.

So what

As The Wall Street Journal reported this morning, a committee hired by Eastman Kodak's board to investigate the circumstances surrounding the company's acceptance of a $765 million loan from the U.S. government in July found that Kodak broke no laws.

The loan was to help Kodak produce pharmaceutical ingredients for the fight against the coronavirus, and it sparked a rally in Kodak shares -- even before the loan was officially announced. The investigation that followed centered on theories that insider trading might have been encouraged by information leaks within the company, and that Kodak may have given stock options to high-level executives in advance of the loan's announcement, to enable them to profit from it. But the special committee, hired through Kodak's law firm Akin Gump, found no such wrongdoing.  

Now what

But there's still the matter of federal investigations into the company. Just yesterday, for example, the Journal reported that the inspector general of the U.S. International Development Finance Corporation (IDFC) is opening a review of the loan. And this is on top of ongoing investigations by the Securities and Exchange Commission and several Congressional committees.  

There's no assurance these other investigations will come to the same conclusions that Kodak's own probe has drawn. In the meantime, the IDFC has suspended payment of the loan amount to Kodak, and the monies are unlikely to be released until these other investigations are concluded.

Rich Smith 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
$4.78 (1.49%) $0.07

*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 09/27/2022.

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.