Eastman Kodak shares are enjoying a renaissance. Shares rose 160 percent on Wednesday morning, an incredible 200 percent on Tuesday. New capital and new business are the reasons for the eyes. Investors are wondering how many stocks can go up?
The answer is not easy. The company has no analysts and no target prices to help investors. In addition, the company is taking out a government loan to set up a pharmaceutical ingredients business. Kodak (verifier: KODK) was and is an imaging business. Evaluating a huge new business is difficult for any investor evaluating a company.
2015 Trading in Kodak shares with a bankruptcy repayment of more than $ 17 was about 0.4 times higher. The company is currently trading more than once and is aiming for more than $ 21 a share, adding new debt provided by the government. The old heights were already eclipsed.
Is it too high? Kodak’s new business is a generic ingredient. Generic manufacturers trade about 1.5 times. Of course, Kodak doesn’t have a business yet. And when that happens, all his sales won’t be drug-related.
Generic manufacturers earn about $ 1 in assets to sell for 40 cents. On this basis, Kodak’s new loan of EUR 765 million USD could yield around $ 300-400 million. USD sales. It would theoretically be worth between $ 450 and $ 600 million. USD market values.
This is the approximate value of “finger in the air”. When valuing an entire company, investors need to add future debt. There’s just no great way to find out where securities can end up already by changing it.
Movement makes some sense. The loan, in one sense, more than doubles the size of the business overnight.
Kodak was the most popular stock on Robintrack on Tuesday, a website that monitors changes in Robinhood’s stock trading accounts. More than 25,000 accounts replenished positions. General Electric (GE) was the second most popular stock exchange, with about 9,600 new positions listed.
The technical reasons for increasing inventory are more buying than selling. Purchase quantity helps explain how much inventory is rising. GE has a market capitalization of more than $ 60 billion. Its shares rose 2.6% on Tuesday, partly due to increased interest from individual traders. Kodak is a micro-cap stock with a closing price of less than $ 350 million on Tuesday. USD. It doesn’t take much for stocks to move.
Kodak’s inventory has now risen more than 350% to almost no return on the S&P 500 and Dow Jones Industrial Average. What will benefit from here is whose guess. However, investors should be prepared for volatility.
Trading in Kodak shares was suspended due to volatility, but resumed after approximately 5 minutes. For investors, it was just an opportunity to breathe a sigh of relief.
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