2 Reasons to Sell Eastman Kodak Stock

Shares in Eastman Kodak (NYSE: KODK) have been on a rocketship rally since the company received a $765 million loan via the Defense Production Act to produce generic pharmaceutical ingredients that are useful to efforts to treat and/or prevent COVID-19.

Kodak may have been selected because of its large, underutilized manufacturing capacity, which includes 88 reactors and a water treatment plant, according to CNBC. The network further states that film chemicals are similar to the key starting materials (KSM) used to manufacture pharmaceutical drugs.

While Kodak stock got a huge price boost out of the news and looks attractive, investors should think twice about jumping on board. The company has a long track record of failed business ventures. And its strained financial condition may make it difficult to properly capitalize on this new revenue opportunity without diluting investors' shares or taking on additional debt. Here are two reasons to avoid the stock.

Source Fool.com