The Stock Market Enters Late-Stage Fanaticism

Even in this crazy market, what to make of a stock that’s risen more than 5,000% since November? I’m not talking about GameStop Corp. or AMC Entertainment. Alpine 4 Holdings Inc. is a tiny company that few people, myself included, had heard of until I stumbled upon a disclosure it filed late on a recent Friday afternoon.

I posed a simple question to the Twittersphere: Why, according to the disclosure, had Alpine and some of its investors filed a libel suit against two investment firms that were betting against the stock? Soon afterward, I felt as if I had been sucked into the matrix.

My Twitter feed was inundated by what appeared to be fervent fans of the stock making fantastical assertions. One known as @shareslanger, who claimed to own nearly 50,000 shares, tweeted that Alpine 4 was “the new Berkshire Hathaway.” Another tweeted it was “the best company in America.” A few said that the stock would “skyrocket” once the company moved from the over-the-counter market to Nasdaq — a plan the company first announced nearly six months ago.

I spend a lot of time on financial Twitter, a realm where people — including such big investors as activist Bill Ackman and short-seller Jim Chanos (a.k.a. Diogenes, or @WallStCynic) — opine on which stocks are destined for greatness or for bankruptcy. It’s always a pretty noisy place, but this was special. Most of the accounts tweeting about Alpine 4 (they refer to themselves as the “ALPP family”) have no traceable link to real people, so I don’t know whether they’re investors or paid shills — the type that have always been a problem with tiny stocks. That said, even in the alternate universe of fin-twit, it’s a stretch to compare a company that lost $5.8 million on revenue of $33.4 million in 2020 to Berkshire Hathaway. Kent Wilson, Alpine’s CEO, did not respond to a request for comment. A spokesman said he was traveling.

The lawsuit accuses two hedge funds — Grizzly Research and FIN Capital — of conspiring to drive down the company’s stock price. Among other things, it cites a research report in which Grizzly called Alpine 4 “nothing but a scam to enrich insiders at the cost of public investors.” In a follow-up call, Siegfried Eggert, the CEO of Grizzly Research, said he found it “very suspect how many people believe in this penny stock.” Eggert and Brian Finn, the CEO of FIN Capital, say they’ve received threats — including obscene images in Finn’s case — related to their comments on the stock. The legal action, too, may be an effort at intimidation: Courts typically treat views of a particular stock as opinion, and often dismiss such cases for failing to meet the standards of libel and defamation.

Alpine 4 is very active in filing disclosures with the Securities and Exchange Commission, and on Twitter. So far this year, the company has filed 14 8-K investor notifications, and announces all sorts of things via the social medium. Its nearly 14,000 followers cheer the stock’s every move and speculate on when the company will announce its move to Nasdaq. In one 8-K filed in early March, the company wrote that “the wait has been as painful and arduous for management as it has been for shareholders.” A spokesman for Nasdaq declined to comment on Alpine’s application.

At a time when meme stocks are generating all sorts of excitement and attracting exceedingly loyal followings, what’s happening with Alpine 4 might seem like a footnote. But to me, it signals a strange phase in the market, where “fans” of specific stocks, even obscure ones, are exhibiting a ferocity that seems unhealthy and largely unsustainable.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

©2021 Bloomberg L.P.

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