- Summary
- Kodak exposed itself to legal and regulatory risk earlier this year.
Its core business is not profitable.
Recent developments will not help the trouble to abate.
I’ve been bearish on Kodak for months now since not long after the announcement about their plans for a government loan to enter the pharmaceuticals business and the subsequent run-up in the stock price. In two previous articles Kodak Share Price Set to Fall and Kodak Could Be a Two Dollar Stock Again Soon I explained my view that Kodak was a poor business, the loan wouldn’t help and wasn’t likely to be made, and that governance concerns were significant. In this article, I will update the reasons I believe this stock is still a short in light of three subsequent developments: the special committee report, third quarter earnings, and the presidential election.
1. The Special Committee Report doesn’t mean anything for Kodak
This past July, a US government agency called the Development Finance Corporation (DFC) announced that it would make a loan of $765 million to Kodak designed to get the company to enter the business of producing pharmaceutical ingredients. This lead to a huge run up in the stock share price over the following days and weeks:
