Shares of Eastman Kodak Company (NYSE: KODK) popped this past month partially in response to the anticipation of the company’s cryptocurrency known as KODAKCoin.
Kodak is joining forces with WENN Digital to create the intriguing new cryptocurrency. KODAKCoin will serve as currency on the imaging company’s platform called KODAKOne.
There is plenty of excitement about how this platform will function. Investors are hoping KODAKOne evolves to become similar to Shuttershock but with a much more vibrant marketplace. But, excitement aside, the volatility of household name cryptocurrencies definitely raises some concerns. Let’s take a balanced look to see if this is the right move for Kodak, and whether or not this signals a good time for investment.
Is KODAKOne Worth the Hype?
There is plenty of discussion in investment circles about KODAKOne as the platform will reportedly be centered on blockchain technology.
The blockchain will be used to help photographers manage content licenses. Each license and transaction is hosted on the KODAKOne blockchain. Data is then used to prevent improper use of photographers’ content. This technology actually searches out unauthorized use of such images on the web. The digital currency KODAKCoin will debut in an “initial coin offering” at the end of January. The coin will be traded on a subsidiary of Overstock.com known as the tZERO platform.
There is still some question as to how, exactly, the company’s new cryptocurrency will be received by the public, subsequently traded and used for the purchase and sale of images. The company has revealed little about the platform and currency, partially in an attempt to ramp up interest in the offering. Some question whether the company’s entry into the cryptocurrency realm is sincere, half-hearted or simply an effort to bump up the stock price.
The blockchain technology helps protect the intellectual property of images registered to the KODAKOne platform. Here’s how it might work. Photographers will upload images they capture with their smartphones or regular digital cameras, have them watermarked with a cyrptographic hash that is indelible on the blockchain. This form of protection empowers photographers to safely sell their images and protect against the unauthorized use of their images across the web.
A New Reason to Buy the Stock?
The market has more than its fair share of cryptocurrencies. From Bitcoin to Ethereum, Coinye, ripple and beyond, those interested in cryptocurrencies have too many to choose from. However, the addition of KODAKCoin is significant simply because the Kodak name still carries weight.
Furthermore, the addition of the KODAKOne platform makes KODAKCoin that much more intriguing. The question is whether photographers and those in search of photos will view the use of KODAKCoin as an annoyance, or as an opportunity to get in on the cryptocurrency craze.
As time progresses and the interest in cryptocurrency eventually settles down, there is a good chance people will revert to the use of traditional money simply because it is more convenient.
Kodak Beyond KODAKCoin
Kodak has much more to offer beyond KODAKCoin. The company sells printers, packages, film and other consumer products. Kodak also provides professional services and graphic communications.
The bad news here is that these traditional sources of revenue are declining. Kodak lost $2 million this past quarter, and earned under $20 million on the same basis across the first nine months of ’17. Its shares rise and dip with considerable volatility that can be partially attributed to the fact that Kodak executives are willing to dabble in the cryptocurrency market.
Though KODAKCoin is certainly intriguing, the company’s primary line of business has been on the downswing since the late 90s. The sales of film have slowed due to the ubiquity of digital cameras and smartphones equipped with such capabilities. Kodak filed for Chapter 11 bankruptcy in January of ’12. The company stopped producing digital cameras, picture frames and pocket video cameras half a decade ago. However, there is still plenty of interest in Kodak’s stock. The question is whether this renewed interest is justified.
Buy, Sell or Hold?
It is clear Kodak is struggling and reaching for a potential lifeline in the form of the cryptocurrency craze. Kodak will receive a financial boost when KODAKCoin hits the market, yet there is no guarantee the cryptocurrency will prove to be a consistent money-maker across posterity.
If you own Kodak, hold at least some of your current position. Those who bought the stock on one of its frequent dips might want to consider taking a portion of the profit off the table. Investors who do not have a position in Kodak should monitor the cryptocurrency market very carefully.
If governments around the world begin to cool to the idea of an alternative currency, cryptocurrency holders will exit their positions and Kodak’s stock will inevitably tumble once again.
Regards,
Ethan Warrick
Editor
Wealth Authority
