"Donald Trump and the great Penny Stock fraud." Thu Jul-30-20 07:28 AM by allStah
What is a penny stock? Well, penny stock refers to any stock of a company that trades for 5$ or less on the stock market. The companies of this type of stock are usually in bad financial shape. They have terrible asset to debt ratios, or are straight up scam companies. They can either start out that way, or fall from being a financially successful company to being a company on the verge of bankruptcy.
Due to penny stocks being so cheap, they can easily be manipulated to increase in price or decrease in price in a matter of minutes or seconds. This is the reason why once a stock drops below 10.00, investment portfolio and fund managers sell their positions in the stock. It is too risky to invest at that point because it is close to penny stock status.
This is why the rule in trading is never invest in a penny stock long term.
Now, this brings us to Kodak. Kodak used to be a booming camera company that specialized in photography products and supplies for the pro and everyday consumer. However, once smart phones were invented and the rise of digital photography, there was no longer a need or demand for their products. Their sales and revenue dropped, and their stock price plummeted to penny stock status.
Prior to Monday, their stock was trading at about 2.00 a share, and volume was around 100,000 shares traded daily. On Monday, Volume rose to 1 million! The next day, Tuesday, Trump informs the public that the government has given a 750 million dollar loan to Kodak to produce Covid-19 Drug ingredients. A photography industry company, who had a market cap of 100 mill prior to Monday, was given a loan 7 times its market cap to produce covid drug ingredients, which it does not specialize in. Think about that.
Now, yesterday, the stock price shot up to 59.99 per share!! I watched traders on webull become millionaires in a matter of minutes, and I watched traders become broke in a matter of minutes as well, because it plummeted down to 33.00 right after hitting the ATH for the day. This is one of the biggest inside trading scams ever.
Now Kodak could very well go on to produce the ingredients and be successful at it, but insiders knew about the deal way before hand , which is why the volume jumped the day before the announcement. This is a clear cut case of fraud, and the SEC should be all over it.
The stock is still sitting pretty at about 39.00 in the pre market ,but those who chased to 59.00 got burned. Crazy thing is, I saw the stock in my rise alerts. It was at about 4.00 at the time. I didn’t think much of it, and saw it as another daily pump, so I didn’t buy . So many people in my feed pissed because they missed out...literally tons of people became millionaires overnight...and mostly the ones that knew before hand!
If i were a betting man, and I am, I would put in PUT options and short the hell out of that stock, because it’s valuation does not support the loan amount. What drastically goes up must drastically come down. And that dude probably will not be president for much longer, the next pres will probably pull that bull crap ass contract.