(Bloomberg) -- Blockchain has the potential to solve a lot of problems, but copyright infringement in the photography industry -- the issue Eastman Kodak Co. has said it's tackling -- isn't one of them, according to one short seller.
Kerrisdale Capital Management is betting that the once-dominant imaging company may face default and a debt restructuring in the next year-and-a-half, and proceeds from the firm's initial coin offering aren't going to change the outcome.
“No photographer would rather be paid in KodakCoins over real money,” according to a report Wednesday from Kerrisdale, a hedge fund known for moving stocks with its outspoken calls. “It's a last-ditch stock promotion gambit for a company hurtling towards bankruptcy.”
Kodak said last month that it's working with Wenn Digital, an affiliate of a company that specializes in paparazzi photos, to offer a blockchain-based service that will help photographers get paid when their images are used. The firm is raising money by selling “KodakCoins,” which it said will be the currency used on the blockchain platform.
Nicholas Rangel, a spokesman for Kodak, declined to comment.
Kodak shares more than tripled the week the company announced the ICO, but have since plummeted about 45 percent. The stock rose 7 percent to $6.21 as of 10:11 a.m. in New York.
“Rather than dreaming of a ‘new economy' for photographers, shareholders should be concerned about an eventual wipe-out,” Kerrisdale said. “Eventually, possibly as soon as the next time Kodak reports earnings, a share price levitating on the hopes of blockchain technology will give way to the gravity of dying, old-world fundamentals.”
Related: KodakCoin Doubts Climb as Short Interest Surges Before Offering
--With assistance from Bailey Lipschultz
To contact the reporter on this story: Lily Katz in New York at lkatz31@bloomberg.net.
To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Brendan Walsh, Dave Liedtka
©2018 Bloomberg L.P.
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