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Kodak Stocks Plunged, Pharmaceutical Venture on Hold

Kodak shares fell further by 7% in the stock trading after hours on Monday. The decline now totaled to 40%.

The sluggish stock market performance came after the government blocked the $765 million loan which will help the company venture into pharmaceutical business.

The decision to halt is a response to senior Democrats’ request for investigations on securities transactions made by the company executives.

On July 28, Kodak signed a letter with US International Development Finance Corporation to launch a new division called Kodak Pharmaceuticals.

The following day, Kodak experienced an unprecedented surge in stocks recording a 530% increase.

US-DFC tweeted its heightened concern over the company’s allegations of wrongdoings. The department said that it cannot proceed with the deal unless allegations clear.

Currently, the US Securities and Exchange Commission looks after the matter.

Under the Defense Production Act, Trump Administration grants Kodak a $765 million loan to produce 25% of active ingredients for generic medications in the United States.

This is intended to reduce dependence on foreign production of drugs and other crucial products. That is part of the protectionist goal of the incumbent administration.

Similarly, the initiative targets to bolster domestic response on the on-going fallbacks of the US in its COVID-19 response.

Eastman Kodak Co. already spent a hefty sum in lobbying the US government before the loan was approved, shedding $870,000 during the entire process from April to June.

 

The Highs and Lows of Kodak

The film and photography pioneer experienced solid highs and lows in its entire run.

Kodak is the first to make photography widely accessible to the mass-market during the 17th century. Its slogan “You push the button, we do the rest” revolutionized the way society views photography.

Since then, Kodak experienced significant milestones. Its special color camera made history during the Apollo 11 space flight. Similarly, American patrons received the brand warmly with the US market. Kodak occupied 85% of the total camera sales in the United States in the 1970s.

However, steep competition and an abrupt shift to digital photography brought an end to its heyday. In 2010, Kodak was delisted from the S&P 500 after sales dropped for nearly half for the period covering 2005 to 2010.

Kodak eventually filed for bankruptcy in 2012. After then, the photography giant remodeled its business and shifted to the production of advanced chemicals.

It is not the first time that Kodak ventures into the pharmaceuticals. In 1988, the company bought Sterling Drug Inc. for $5.1 billion in an attempt to boost its life sciences segment. Although just six years later, it sold off its Sterling assets to concentrate solely on photography and imaging business.

Another segment Kodak attempted to penetrate includes the cryptocurrency market in 2018. It announced its plan to release photo-centric crypto called KODAKCoin which caused the company’s stocks to spike 125%, yet none materialized.

Recently, the company experienced a 31% drop in its sales caused by the pandemic, causing to revenue to fall short compared to last year.

In response, Kodak expressed its confidence to manifest improvement both in sales volume and working capital in the third quarter.



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