What's happening?

Shares of Eastman Kodak (NYSE:KODK) were up about 10% as of 11:20 a.m. EST as speculators piled back into stocks associated in any way with blockchain and cryptocurrencies. This despite Kerrisdale Capital publishing a public short report on the company today, laying out a case that its stock price should go to zero.

So what

The Rochester, New York-based photography company became "cool" again by laying out its plan to partner with WENN Digital on a product it's calling KODAKOne -- a platform for photographers to sell their images to content buyers. Transactions on the platform will be made in KODAKCoin, a new cryptocurrency that is expected to launch in an initial coin offering (ICO) in the coming weeks.

Cameras resting on film reels

Image source: Eastman Kodak.

Eastman Kodak's foray into cryptocurrencies and blockchain sent its share price soaring in January -- the stock more than tripled in the days following its announcement. The photography company is just one of many that have seen their share prices pop after blockchain-related press releases and name changes. 

Not everyone is excited about KODAKOne or KODAKCoin, though. In the short report Kerrisdale Capital published today, it calling Eastman Kodak a "dying relic of American manufacturing" whose surging share price is the result of hype surrounding anything even remotely related to blockchain or cryptocurrency.

A snippet from the report appears below:

Unsurprisingly for such a nonsensical business concept, the team behind KODAKCoin has zero credibility. The chairman and founder of a key firm behind the ICO is a stock promoter who was previously banned from a Canadian stock exchange. KODAKOne's executive team is unknown within the blockchain developer community. KODAKCoin is not a serious attempt to apply new technology to a real problem -- it's a last-ditch stock promotion gambit for a company hurtling toward bankruptcy.

Kerrisdale Capital concludes its analysis with a price target you'd only find in a buy-side report: $0 per share.

Now what

Eastman Kodak is already one of the most-shorted stocks on the market, with as much as 55% of the float sold short. Thus, its upward price movements are often magnified by short sellers who have to buy the shares to cover their short positions.

Fees to borrow the stock to facilitate a short sale are as high as 165% per year, according to IBorrowDesk.com, a website that charts borrow fees at online brokerage Interactive Brokers. For short sales to be profitable, the stock would have to decline faster than borrow fees add up.

Eastman Kodak's rising stock price seems to have more to do with cryptocurrency mania and high short interest than anything related to its underlying business. 

Jordan Wathen owns shares of Interactive Brokers. The Motley Fool recommends Interactive Brokers. The Motley Fool has a disclosure policy.