The stock price of Eastman Kodak company has been nothing short of a roller coaster over the past month. With the recent announcement of a new cryptocurrency being developed called KodakCoin investors were quick to get on board, only to quickly re-assess and correct their market positions. After sparking at a price of $12 per share the stock has dropped back down to a more reasonable price of $5 per share. The only question now is just how much of this price if any is still the result of irrational exuberance and cryptomania.
According to Sahm Adrangi of Kerrisdale Capital there is a very large amount of risk with very little potential return for the company. He specifically points out long-standing financial woes that the company has suffered, including a recent bankruptcy filing. While some believe that the move into cryptocurrency represents a new chapter in the company’s history, Sahm Adrangi remains skeptical.
One of the largest reasons for this is the very nature of the product itself. KodakCoin is not an internal project done by the company itself, instead of the simply licensing deal for the Kodak name. Even if the cryptocurrency operation is a success it will not be owned by the parent Kodak company, instead, it will continue to be run and operated by the outside firm Wenn Digital.
Sahm Adrangi highlights the fact that company which built the blockchain software that KodakCoin will run on has very little history. As a result, there is little reason to assume that there is any significant strategic value to the partnership; there simply is not enough value he made by Kodak to justify any considerable increase in stock valuation.
Finally, the last piece of evidence that Sahm Adrangi mentions is the lack of visible support for the initial coin offering. Despite being pushed back several weeks, the coin has only generated $2,000,000 dollars in investment revenue. This is a very low rate of response; it is simply is not enough money being invested to justify the increase in price.
As mentioned before not all $2 million of these dollars will go to Kodak, and even if it did it would not be enough to save the company, let alone justify the current market valuation.