COVID-19 brought an economic storm that showed investors which stocks can withstand the winds — but are investors aware they could actually be trading the worst stock to buy?
In today’s world, when a company finds a way to connect itself to COVID-19, it causes a potential recipe for high volatility. Many companies have succeeded and many have failed in this venture, generating some of the best and worst stocks to buy in 2020.
And the newest member in the war against the coronavirus is Eastman Kodak Co. (NYSE: KODK) — a struggling photography company.
President Donald Trump’s trade adviser, Peter Navarro, presented a list earlier this year of potential American companies that can produce pharmaceuticals domestically so we can rely less on foreign sources. According to Navarro, Kodak could be the perfect company to begin the process by producing some of the generic ingredients found in most drugs (one of which Trump believed could help with the vaccine).
Kodak was swift to agree to a proposed $765 million loan under the Defense Production Act, and its stock skyrocketed.
When the news hit the stock market in July, Kodak’s stock bounced to a 52-week high of more than $33, surging more than 1,200% after trading barely $2.
However, like with everything in the stock market, what goes up must come down.
Within a week a major scandal hit the news: Allegations of the company giving “spring-loaded” options to board members and other insiders before the loan was officially announced… And with that came a sharp drop off. The stock now trades at $8 a share and the multi-million dollar deal was canceled.
So is Kodak worth investing in?
Traders, today I’m calling BS on Kodak.
I’m not even going to go into the CEO’s announcement in The Wall Street Journal to push forward in making ingredients for generic drugs, with or without a $765 million government loan deal (to each their own I suppose).
Kodak CEO Jim Continenza tweeted Monday he’d be live on The Wall Street Journal’s “Tech Live” to discuss the future of the company.
— Jim Continenza (@JimContinenza) October 19, 2020
After the CEO’s tweet, the stock rallied about 50 cents higher on that news alone.
This goes to show you exactly what kind of market we’re in nowadays — all a public company has to do to get their stock to trade higher is tweet out when its next public appearance is.
But I just can’t seem to buy into what Kodak’s trying to sell here All I’m seeing is junk and the possibility that the company could have given insiders and its board members “spring-loaded” options before the $765 million U.S. pharmaceutical deal with the company was even announced.
Kodak’s slogan may be “You Press the Button, We Do the Rest,” but I don’t think I’ll be pressing this stock’s button anytime soon.
And now Kodak is following a similar path that we witnessed with Hertz Global Holdings Inc. (NYSE: HTZ) during its downfall…
What do you think about Kodak’s scandal? Would you still invest in it, or have you already? And as always, leave a comment down below — we’d love to hear your thoughts about today’s video!
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