Kodak shares rise nearly 1,500% on Covid drug loan deal

Kodak shares have surged 1,481 per cent this week in heavy trading as the Trump administration offered the former photography industry leader a financial lifeline to make ingredients in drugs used to fight coronavirus.

The company’s valuation jumped from $92m to $1.5bn as it shares rose from $2.10 at Friday’s close to $33.20 on Wednesday. The stock was halted more than a dozen times within the first two hours of trading on Wednesday, a day after it more than tripled in value.

The pace of trading far surpassed anything seen since the company returned to the New York Stock Exchange after its emergence from bankruptcy in 2013.

Kodak, which is based in Rochester, New York, and the US International Development Finance Corporation, announced on Tuesday that the company had secured a $765m loan to produce drug ingredients under the Defense Production Act.

Kodak shares began climbing on Monday. On that day, a Rochester television station published — and then deleted — a report saying an announcement was forthcoming from the company on Tuesday, news anchor Adam Chodak of CBS-affiliate WROC told the Financial Times. The WROC report did not include details on what the two organisations would reveal, beyond a manufacturing agreement related to Covid-19.

By day’s end, Kodak shares had gained 25 per cent as some 1.65m shares changed hands, more than 14 times the daily average over the preceding 10 trading days, according to data compiled by Bloomberg.

Jim Continenza, the executive chairman of Kodak, told CNBC on Wednesday that he “couldn’t tell you what influenced that [volume]” on Monday, but that the team at Kodak “knew for over a week” about the looming announcement.

“I mean obviously this has been a pretty tight kept secret obviously, even until the last day,” he said.

The Securities and Exchange Commission declined to say if it was investigating the surge in trading activity ahead of the announcement. Kodak and Nexstar, the owner of WROC in Rochester, did not respond to requests for comment.

Kodak trading volumes continued to rise on Tuesday and Wednesday, with more than $10.9bn worth of the stock — some 558m shares — changing hands.

Line chart of Number of shares traded each day (m) showing Picture perfect? Trading activity surges in Kodak stock

The stock, which briefly touched $60 a share on Wednesday, quickly found its way into retail trading accounts. Investors on the stock-trading app Robinhood were among the big purchasers of Kodak, with 117,105 accounts owning the stock by the end of Wednesday, according to data tracking activity on the amateur trading app. Fewer than 10,000 Robinhood accounts had owned shares in the company on Monday.

Mr Continenza told the Financial Times on Tuesday that Kodak would use the $765m from the government to produce ingredients for generic medicines, including some that could be used to treat Covid-19.

Mr Continenza joined the company’s board in 2013 after Kodak’s failed attempts to remake its analogue film business landed it in bankruptcy. The presiding judge in the case called the failure “a tragedy of American economic life”. Mr Continenza has also recently increased his stake in the group. In June, he disclosed to US securities regulators that he had purchased 46,737 shares.

Line chart of Market capitalisation ($) showing Kodak's value rises nearly 15-fold in two days

The company, once at the forefront of technological development and a bedrock of the upstate New York economy, has tried to shift its business model before. In 2018, it latched on to the popularity of the blockchain and cryptocurrencies, lending its familiar brand name to KodakCoin — a tool to help photographers secure payment for digital image rights. That move sent its shares briefly soaring in value.