The Securities and Exchange Commission (SEC) is scrutinizing the deal, too, with an eye towards records of stock option grants. A large number of stock options were granted as close as a day before the deal, raising concerns that executives at Eastman Kodak set themselves up for a massive payday as shares surged nearly thirty-fold.
Robinhood Traders Joined the Fray – Now They’re About to Pay
Company insiders may have thought the deal would give the stock price a sizable boost. They probably never imagined how massive that boost would be.
KODK’s surge was magnified by headline-chasing retail traders. Data from Robintrack shows that less than 9,000 Robinhood accounts held Eastman Kodak shares before the deal was announced.
After the deal announcement? That number exploded to over 120,000. That’s a considerable number of individual accounts owning a single small-cap stock.
Unsurprisingly, KODK ownership waned as shares suffered an 80% tumble from their $60 peak. Even so, the company still ranks 82nd in popularity on the retail trading app. More Robinhood users own Kodak stock than other retail favorites like Peloton, Zoom, and Beyond Meat.
Where will Kodak stock go from here? Today’s plunge put shares about on par with the deal itself in terms of market cap. Should the deal fall through, investors could see KODK drop back to $2.
Until this controversy is settled, this risks becoming another incident where short-term greed leaves Robinhood traders holding an empty bag.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. Unless otherwise noted, the author has no position in any of the stocks mentioned.