With a significant short volume ratio, most robin hood traders will most likely expect another short squeeze in Eastman Kodak (KODK). If this is the case, traders need to buy before everybody else. That’s critical if you want to make money in these markets. When everybody knows the trade, the opportunity is gone.
Business Model And New Business Model
Kodak offers software, hardware, consumables, and services primarily to clients in commercial, print, manufacturing, and entertainment.
The company was created more than one hundred years ago. The brand is extremely well-known, which explains why so many traders like the shares.
I know that some traders don’t even look at the company’s business models. They buy or sell when they feel the momentum in their trading desks. In my view, that can be a bit risky while trading KODK.
A few months ago, KODK signed a letter of intent to start a pharmaceutical business model. The new idea is inspiring. Kodak employees know a lot about chemical processes, and could offer a significant amount of know-how to the pharmaceutical industry. We all hope that the company will be able to receive new money from debt holders. Notice that in that case scenario, the company’s sales may trend up again. Besides, we could see the share price spiking up violently.
With that, traders need to be very careful. The business model of KODK has been declining for the last decade. Both net income margins and sales are declining. Most analysts out there are not giving any buy or sell recommendation. Wall Street analysts appear to be looking at other business models and other industries.
Value investors will most likely not buy shares because the company has to pay a significant amount of money soon. This may be good for short term traders. In my opinion, they will be alone in the trading game. You guys will have more shares available to buy.
Stock Catalysts And My Take Away
Traders will most likely buy shares if they see the share price increasing violently in the coming days. Taking into account the large amount of short interest volume, KODK could again see the share price going up a lot.
Stay focused and also study the company’s press releases. If KODK receives additional financing from debt holders, the management may be able to start its pharmaceutical business model. In that beneficial case, traders will most likely push the share price up to higher marks.
On the contrary, if debt holders are not willing to offer more money, the share price could fall. In my opinion, debt holders will try to obtain shares from the company. I hope stock dilution does not represent a problem for KODK. Remember that most traders dislike the companies that print too many shares.
Disclosure: We don’t have shares of KODK, we were not paid to write the article.
Stay Tuned! We Will Be Giving More Analysis About KODK soon.