Sahm Adrangi, Chief Investor Officer for Kerrisdale Capital released a scathing report last month regarding Eastman Kodak Company’s (NYSE: KODK) announced partnership with WENN Digital Inc, to develop a blockchain-enabled licensing platform. Since the announcement, Kodak’s stock has increased 187 percent, creating nearly $300 million dollars in value.
Sahm Adrangi insists that the KodakOne and KodakCoin business models are “flawed,” and “nonsensical,” adding that the share increase has been based on “unjustifiable hype,” used to attract potential investors. But will do nothing to offset the company’s fiscal struggles including decreasing revenue, increasing default risk, and negative free cash flow.
Kerrisdale Capital believes that using blockchain technology to operate an image copyright platform will accomplish nothing for Eastman Kodak and will have virtually no impact on copyright infringement. Claims to the contrary fail to take into account the resources necessary to enforce copyright laws.
Additionally, Sahm Adrangi accuses the board of directors of Eastman Kodak of granting themselves shares of restricted stock the day before the announcement, which could possibly incur an SEC investigation. This behavior has led some to believe the share price in Eastman Kodak may lose value if such an investigation were to occur.
Even more troubling, WENN Digital Inc, the lead developer of KodakOne and KodakCoin, is a company with a shady past and questionable credibility. Sahm Adrangi points out that the concept behind KodakOne has several flaws including the lack of advantage in using blockchain to reduce copyright infringement as well as failure to enforce infringement violations.
Further casting doubt on the company’s credibility is the fact that the executive team of KodakOne is virtually unknown in the blockchain developer community, and AppCoin, an ICO marketing firm hired by WENN Digital to market the KodakCoin is being led by Cameron Chell a stock promoter whose shady past includes being banned from the Canadian Stock Exchange.
Kerrisdale further asserts, that Eastman Kodak Company’s attempt to establish an image-based blockchain to help photographers establish intellectual property rights, is a “hollow attempt,” to join with the ICO mania currently going around and will not improve Kodak’s poor fiscal performance overall.
Kerrisdale has a short position in Eastman Kodak Company, should the company’s share price decrease, Kerrisdale Capital will benefit.