What's going on my fellow stock market gamblers, i hope you're having a great day. My name is matt and in this video i will be discussing the major news related to codec that launched its stock to the moon. My goal is to provide you with insights. To what's going on so you can make better training and investing decisions.

It would be great if you could smash the like button, because it really helps with the channel and is truly appreciated by me. If you're new hit the subscribe button and don't forget to turn on your notifications, so you don't miss any of the new videos alrighty then, let's dive into it for those of you who missed it on your stock scanners today, kodak, whose symbol is kodk, ran an Incredible 300 plus percent at its peak it was up over 640 percent. The fun doesn't stop there, though. Over the past two days, kodak is up an unbelievable 1200 percent.

This amazing bullish move might make you fairly wonder what in tarnation is going on. That's a fair question and i'm here to help on the evening of tuesday july 28th, it was announced that president trump made a deal with kodak and the former film giant will now be making drug ingredients under the defense production act. The us government is loaning kodak, 765 million dollars to start manufacturing pharmaceutical products. The government's goal is to increase u.s self-sufficiency in response to the coronavirus pandemic.

Kodak's ceo told the wall street journal that the pharmaceutical ingredient production will eventually make up 30 to 40 percent of their business. To make this a reality, the company said it will be expanding its facilities in rochester, new york and st paul minnesota under a new kodak pharmaceutical's arm. The news was obviously well received by the market, but does that mean that the massive move was justified? The short answer is no, it was just an announcement. People are piling in because of the hype.

A better question is: will they be able to pull it off and if they do, will it mark a strategic pivot for the business? I personally think the answer is yes, i'm biased in the sense that i want them to be successful, because it would create jobs and be beneficial for the united states, but my optimism isn't completely unwarranted. This is in kodak's, first run in the drug industry. In the 1990s kodak was involved in the production of non-prescription medicines such as aspirin. It eventually sold this business to a healthcare giant for just under three billion dollars in 1994..

On top of that, there is a precedent for this type of move: fujifilm, kodak's, longtime competitor, has been in the pharmaceutical industry for decades. In fact, 43 of fujifilm's total revenue in 2019 came from their work in healthcare. They are looking to ramp things up and double their sales in the healthcare sector over the next few years. My point is that it wouldn't be surprising at all for kodak to be successful in its drug ingredient production.

The company already has the chemical manufacturing expertise and the physical infrastructure to make it a reality as a pleasant surprise, their financial statements aren't that bad, so i don't think they will be hindered in this next endeavor. Let me show you what i'm talking about. Let's start with the income statement from 2015: until now, kodak's total revenues and gross profit have been declining at a notable rate. The net income has been hit and miss.

It hasn't been growing, but they're also not hemorrhaging money. The total current assets is 669 million, and the total current liabilities is 340 million. This ratio of roughly two to one means that kodak owns more than it has in debt, which is obviously a good sign in terms of long-term assets and long-term liabilities. The total assets is 1.2 billion and the total liabilities is 1 billion.

This ratio is also above 1, so i don't find these numbers to be concerning. I do want to point out something interesting, though, take a look at the long-term debt over the past five years. Kodak has been using its cash to pay down its debt. I personally believe this is a strategic business move, because it makes the company more agile, since they aren't being severely restrained.

They have the freedom to pivot into new industries such as pharmaceuticals in general. The financial statements indicate to me that the film and printing industry has been declining, but kodak has managed to remain relatively unburdened in the short term. Kodak stock has a lot of hype. There is potential for high reward, but there is also high risk trading situations like this isn't really my style.

So i would just warn you to not let your risk get out of hand in more of a long-term view. I do think this new business initiative gives kodak a fighting chance, but i would like to see how things look when production gets underway. Let me know your thoughts on kodak in a comment below if you enjoyed the video. Let me know by hitting the like button, if you enjoy this type of content subscribe to the channel and don't forget to turn on your notifications, thanks for watching and until next time best of luck in the markets, you.