July 30, 2020 / 12:37 PM / 4 days ago

Kodak rally builds after surprise U.S. pharma deal

(Reuters) - Shares of Eastman Kodak Co (KODK.N) jumped more than 20% in premarket trading on Thursday after ballooning nearly 16 times in value this week, following a $765 million loan from the U.S. government to produce pharmaceutical ingredients.

The U.S. International Development Finance Corp said on Tuesday it would sign a letter of interest to provide the loan to Kodak, once an industry leader in cameras and the imaging business. (bit.ly/2P2bzXB)

Kodak shares rose four-fold on Wednesday, with retail traders on the popular Robinhood trading app piling into the stock.

Its shares have gone from trading at $2 to more than $30 apiece in three days and short selling specialists S3 Partners said that sellers were still scurrying to cover their short positions. The financial analytics firm said 9.48% of the stock was currently being “shorted”, where investors bet that the shares will fall.

The participation of retail investors has spiked since COVID-19 lockdowns were introduced and they are credited with sparking rallies of between 300% and 500% in stocks of bankrupt or soon-to-be-bankrupt companies such as Hertz (HTZ.N), Chesapeake (CHK.N), Whiting (WLL.N) and JC Penney.

The loan to Kodak comes at a time when the Trump administration has been looking to bolster the ability to produce drugs and their raw materials in the United States after the COVID-19 pandemic exposed the industry’s dependence on China and India for its supply chain.

Reporting by Neha Malara; Editing by Ramakrishnan M.

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