Kodak (KODK $29.83) is up over 1,000% and it is way to much! There are not many times that something like this comes along for all of us to make money off of. If you are looking for a different view of this stock and the new generic drug company that it will become, then you found the write information.
Let’s get right into what Kodak has to offer us as investors. They hold an astonishing 22,000 patents. I fully believe that they have been under appreciated in terms of value. With that being said though, the recent run up in stock price is WAY overboard. I get it that the government is giving them a loan for $765 million dollars to get their new drug business up and running. It is being done to help alleviate our dependency on foreign countries when it comes to our drug needs.
When the Covid outbreak took hold in the U.S., we quickly found out that our supply chain in certain industries was not as resilient as we all thought. One of these industries was the drug industry. We started running into empty shelves for much needed medicine. It is a major problem that needs to be addressed. The U.S. government has started to attack this issue with the first of it’s kind loan from the Defense Production Act to be handed out. But let’s take a closer look at everything before we jump all over this stock for the long haul.
Kodak has pulled in revenue of 975 million dollars in 2019 for the entire year. They have outstanding shares of almost 43.7 million shares. So they are getting revenue of a little over $23 a share. And remember that this is just revenue, not profit. If we get into their profit statements, then you are going to be bitterly disappointed. They currently have a NEGATIVE $4.85 a share earnings. This means that they are losing $4.85 a share every year at this point. This should change a bit with the new business starting to take off. But is it enough to make a 1,000% gain realistic? My answer is absolutely not! (UPDATE 7-31-20…Take a look at their chart down below to see how they have been doing over the last year price wise. It is already starting to crash!)
When it comes to my gold standard short, this hits all the right buttons. The stock has experience an unexpected rocket like climb. It seemed to me that many people where starting to suffer from FOMO (Fear of missing out). I had multiple people calling and texting me about this one. So much so, that I started to look into it myself. (The reason I wrote this article) I am hoping that I have saved some people some heartache from not losing to much cash. The possible income increase is unknown at this point and a realistic long term approach needs more information to make a well researched buy. With the absence of said information, my only option is to SHORT it and to do it quickly.
There are a few ways to play this stock, but the main easy one is to just short it. If you are concerned about a continued meteoric rise, you can buy some call options to protect yourself. If you are looking to really take a chance on this stock going down, you can buy yourself a few put options. They are moving all over the place, so be careful and do some research on where you thing they will end up. I am calling this stock to be in the teens by the end of August if not by the end of next week. I see a decline of 50% over the next few weeks or next 2-3 months at the latest. At that point, we will need to revisit this stock and see what is going on with the new drug business.
Let’s recap this and give some solid predictions. This is a rare opportunity to short a FOMO rising stock. They have negative earnings that are pretty massive and they have not even produced a drug yet. I would say that my more conservative investors can just short a comfortable amount and for my more risk taking readers, go for some larger shorts or even get into some longer term put options. You also have the option of buying call options to protect on the chance that the stock has another upshot to higher levels. Thanks for reading and don’t forget to subscribe to my newsletter for more money making ideas.
UPDATE 7-31-20…the stock is starting to crash already. For all the readers who jumped on it quickly…congrats! Today was a GOOD day. 🙂