Over the past few days, Kodak shares have nearly tripled. Yes, this is the same Kodak that produces the disposable cameras of yesteryear – the ones we took to Disney during sixth grade that printed out horrible-quality three by five photos…that is if you remembered to take them into Walmart to be developed. After filing for bankruptcy protection in 2012, you’d think the company has stumbled upon some amazing new product to cause their stocks to jump so drastically over the span of a few days. The truth? Kodak has announced they will be issuing a cryptocurrency.
Many people are calling this move what I believe it really is: a “last grasp hope” on the part of the 130-year-old camera company. Whatever the intention though, Kodak’s initial coin offering, slated to begin on January 31st at midnight, has had huge implications for stockholders and for the market at large.
Kodak isn’t the only company taking advantage of the ongoing crypto-craze. The Kik messaging app raised 168,732 ETH (approximately $200 million at the time of writing) in a few short days, and Starbucks Chairman Howard Schultz has raised more than a few eyebrows by his recent comments on cryptocurrency, causing many to speculate on the possibility of a “StarBucks” token, if you will.
There’s no question that the Kodak ICO announcement created a rise in stock price that probably shouldn’t have happened. When this happens, people generally use the word “bubble” as their descriptor of choice. While this is currently an isolated event, the funds Kik raised also helps shed some light on traditional “legacy world” companies seeing cryptocurrency as an unregulated grab-bag of funds they can use to pad their budgets. This makes me wonder: is the stock market the real bubble here?
It’s no secret that traditional Wall Street investment bankers have been calling the crypto market a bubble for several years – the same market that’s only existed since 2009. It’s also no secret that the stock market (which has existed since 1817), has been on a bull run since 2009 and has experienced little to no corrections during that time. In fact, this bull run is the second largest stock market run in history.
Given these facts, it seems fairly hypocritical of legacy investors and Wall Street executives to call out the crypto market for “being in a bubble.” Not only is the stock market approximately 192 years older than the crypto market, it has also stayed in a bull run during the entire existence of the crypto market. The case for a stock market bubble becomes much easier to prove when you couple this fact with Kodak’s “stunning” stock price jump.
What if crypto isn’t actually the bubble? What if the real bubble is the stock market? If that’s the case, we should expect a Starbucks cryptocurrency announcement (should there be one) to cause their stock to rise dramatically – perhaps double or triple. Maybe traditional investors should consider the stock market’s age and recent bull run before they criticize our new and innovate market. They might be getting more than they bargained for in the near future.
