What you Need to Know about ALPP

$ALPP – Alpine 4 Holdings Stock Analysis: As you may know, Alpine 4 Holdings is a day away from being uplisted to the NASDAQ, in which they will keep their same ticker $ALPP. The news about their uplist has caused the stock to be up nearly 32% in the past 5 trading days. However, many of us know about the uplisting and the implications that it has on their stock (if you do not read my previous article explaining this here). However, before this stock starts trading on the NASDAQ, I think that it is important to take the time to learn about their company before investing in their NASDAQ IPO. Company Overview: Alpine 4 Holdings ($ALPP) is a conglomerate that acquires businesses that they determine to be “Drivers, Stabilizers, and Facilitators”. Alpine 4 Holdings focuses the adaption of new technologies, and how it can drive innovation for businesses. Furthermore, their portfolio of companies (subsidiaries) is synergistic, meaning that they provide more combined value together than the sum of their values separately. Alpine 4 has the following Holdings, which will be elaborated on further later in this analysis: A4 Corporate Services, ALTIA, Quality Circuit Assembly, Morris Sheet Metal, JTD Spiral, Excel Fabrication, SPECTRUMebos, Impossible Aerospace, and Vayu. Investment Overview: Drivers, Stabilizers, and Facilitators (DSF): Drivers are companies/technologies that are in emerging markets, which have large potential for lucrative returns. These companies are young, small, and can benefit from the proper structure/guidance that ALPP provides. Stabilizers are companies that have loyal customers, consistent revenues, and provide solid returns. Facilitators: Facilitators are companies that provide products/services that Alpine 4’s holdings can use to create competitive advantages over their competitors. Company Holdings: Altia: Altia is an automotive technology company that offers connected car technologies suc as 6th Sense Auto, and BrakeActive. 6th Sense Auto is a connected car technology that helps dealerships improve inventory management, reduce costs, and increase sales. BrakeActive is a safety device that improves car break lights, which helps their customers to decrease their probability of being rear-ended by up to 40%. Quality Circuit Assembly: QCA provides electronic contract manufacturing solutions to their business/enterprise partners. QCA aims to procide their solutions to leaders in the industrial, scientific, military, medical, and green industries. QCA provides Printed Circuit Board Assembly (PCBA), Cable & Harness, and Box Builds & Mechanical Assembly solutions. American Precision Fabricators: APF provides American made fabricated metal parts (cutting, machining, and forming metals), assemblies (structuring metal via welding, fastening etc.), and sub-assemblies (assembling smaller pieces for the customer to put together, think of Ikea) to Original Equipment Manufacturers. Morris Sheet Metal (and JTD): MSM is a commercial sheet metal contractor and fabricator. MSM specializes in dust collectors, ductwork, rage hoods, ventilation systems, furnaces, and much more. JTD is a sister-company to MSM, providing them with specialized spiral ductwork. Excel Fabrication: Excel provides fabrication. Design, build, installation, repair, maintenance, and many other services to their customers in the food, beverage, dairy, mining, oil, mineral, and Refrigeration businesses. Impossible Aerospace: IA builds high performance electric aircrafts, which they provide to governments, first responders, and security provides to help them save lives. The IA team consists of experts in the related fields who have come over from top companies in the USA (Tesla, NASA, Icon Aircraft etc.) IA was founded by former Tesla Engineer Spencer Gore. Vayu: Vayu is a company who plans to lead Vertical Take-Off and Landing (VTOL) space. They plan to provide their products to (large drones) to be used in medical, logistic, energy, and disaster relief scenarios. Financial Information: 2020 Financial Performance: In 2020, ALPP grew their revenues by 19%, however their cost of revenue grew by 25%, which means that their gross margin decreased YoY (decreased by 5%). Furthermore, their losses from operations in 2020 increased by 137% which is not good at all and had a large effect on their net losses increasing by 157%. A decent portion of this loss comes from the accounting procedures involved in their numerous acquisitions. Overall, I think that they are growing at a decent rate, however they are losing a lot of money through their acquisitions. I think that viewing their Q1/2 earnings reports will give more insight into how these companies are performing for them, which could help me to make sense of their large losses. 2021 Q1/2 Financial Performance: For the first half of 2021, ALPP has reported revenues of $22.5M, which puts them on pace to beat their previous yearly revenues by 34%. Furthermore, their cost of revenue is on track to increase by 27%, indicating that their gross margins are likely to increase YoY. Unfortunately, it is not all good news, as ALPP is on track to reporting a net loss of $18.5M, which would represent an increase of 130%, which is making me worry about their future potential, they keep digging themselves a deeper and deeper hole. However, majority of tis loss comes from their acquisitions of Thermal Dynamics, and KAI Enterprises which were both purchased in Q1, and 66% of the net loss this year has come from their Q1 losses. Equity Compensation Plan: Currently, there are 210,000 shares that are authorized to be issued under Alpine 4 Holding’s Equity Compensation Plan. If these shares were to be issued, it would have a dilutionary effect of 0.1%, which is essentially negligible. Direct Offering: In 2021, ALPP has partaken in a direct offering in which they sold 8.33M shares for $50M to investors. The listing of these shares had a dilutionary effect on ALPP of 6.1%. This news also caused a 12% drop (February 11th – February 12th). Management Team: Kent B. Wilson (CEO): Prior to being CEO of Alpine 4 Holdings, Mr. Wilson was the CFO of United Petroleum, dealing with their financials, operations, and their supply chain. Prior to this Mr. Wilson was the CEO of Crystal Technologies, who are in the automotive and insurance industries. Overall, Mr. Wilson has a deep history in management and finance, which should bode him well as the CEO of a conglomerate company. Ian Kantrowitz (Founder/VP of Investor Relations): Prior to ALPP, Mr. Kantrowitz was a project manager for both Continental Homes and Engle Homes, and prior to that he was the 5th best performing banker at Wells Fargo. I believe that Mr. Kantrowitz’s experience in both management and financial positions makes him a valuable asset to the ALPP team. Jeffrey Hail (COO): Mr. Hail has plenty of experience in both the government and private sectors. Mr. Hail achieved this by working at the Arizona Department of Transportation, and then transitioned to the private sector in niche sectors. Overall, there is not too much detail about Mr. Hail’s previous work and responsibilities, which leads me to believe that he is the least fit out of the bunch to be a part of the ALPP management team. Larry Zic (Chief Accounting Officer): Mr. Zic has an abundance of knowledge in the space that stems back to his days as CFO of an International retail business, Senior VP of Finance at Sake Inc. Furthermore, Mr. Zic graduated with a dual degree in Accounting and Computer Information, and also has received his CPA. Overall, Mr. Zic has the experience necessary to be in one of the top management positions at ALPP.

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What you Need to Know about ALPP

bullish

$ALPP – Alpine 4 Holdings Stock Analysis:

As you may know, Alpine 4 Holdings is a day away from being uplisted to the NASDAQ, in which they will keep their same ticker $ALPP. The news about their uplist has caused the stock to be up nearly 32% in the past 5 trading days. However, many of us know about the uplisting and the implications that it has on their stock (if you do not read my previous article explaining this here).

However, before this stock starts trading on the NASDAQ, I think that it is important to take the time to learn about their company before investing in their NASDAQ IPO.

Company Overview:

Alpine 4 Holdings ($ALPP) is a conglomerate that acquires businesses that they determine to be “Drivers, Stabilizers, and Facilitators”. Alpine 4 Holdings focuses the adaption of new technologies, and how it can drive innovation for businesses. Furthermore, their portfolio of companies (subsidiaries) is synergistic, meaning that they provide more combined value together than the sum of their values separately.

Alpine 4 has the following Holdings, which will be elaborated on further later in this analysis:

A4 Corporate Services, ALTIA, Quality Circuit Assembly, Morris Sheet Metal, JTD Spiral, Excel Fabrication, SPECTRUMebos, Impossible Aerospace, and Vayu.

Investment Overview:

Drivers, Stabilizers, and Facilitators (DSF):

Drivers are companies/technologies that are in emerging markets, which have large potential for lucrative returns. These companies are young, small, and can benefit from the proper structure/guidance that ALPP provides.

Stabilizers are companies that have loyal customers, consistent revenues, and provide solid returns.

Facilitators: Facilitators are companies that provide products/services that Alpine 4’s holdings can use to create competitive advantages over their competitors.

Company Holdings:

Altia:

Altia is an automotive technology company that offers connected car technologies suc as 6th Sense Auto, and BrakeActive.

  • 6th Sense Auto is a connected car technology that helps dealerships improve inventory management, reduce costs, and increase sales.
  • BrakeActive is a safety device that improves car break lights, which helps their customers to decrease their probability of being rear-ended by up to 40%.

Quality Circuit Assembly:

QCA provides electronic contract manufacturing solutions to their business/enterprise partners. QCA aims to procide their solutions to leaders in the industrial, scientific, military, medical, and green industries. QCA provides Printed Circuit Board Assembly (PCBA), Cable & Harness, and Box Builds & Mechanical Assembly solutions.

American Precision Fabricators:

APF provides American made fabricated metal parts (cutting, machining, and forming metals), assemblies (structuring metal via welding, fastening etc.), and sub-assemblies (assembling smaller pieces for the customer to put together, think of Ikea) to Original Equipment Manufacturers.

Morris Sheet Metal (and JTD):

MSM is a commercial sheet metal contractor and fabricator. MSM specializes in dust collectors, ductwork, rage hoods, ventilation systems, furnaces, and much more.

JTD is a sister-company to MSM, providing them with specialized spiral ductwork.

Excel Fabrication:

Excel provides fabrication. Design, build, installation, repair, maintenance, and many other services to their customers in the food, beverage, dairy, mining, oil, mineral, and Refrigeration businesses.

Impossible Aerospace:

IA builds high performance electric aircrafts, which they provide to governments, first responders, and security provides to help them save lives. The IA team consists of experts in the related fields who have come over from top companies in the USA (Tesla, NASA, Icon Aircraft etc.) IA was founded by former Tesla Engineer Spencer Gore.

Vayu:

Vayu is a company who plans to lead Vertical Take-Off and Landing (VTOL) space. They plan to provide their products to (large drones) to be used in medical, logistic, energy, and disaster relief scenarios.

Financial Information:

  • 2020 Financial Performance: In 2020, ALPP grew their revenues by 19%, however their cost of revenue grew by 25%, which means that their gross margin decreased YoY (decreased by 5%). Furthermore, their losses from operations in 2020 increased by 137% which is not good at all and had a large effect on their net losses increasing by 157%. A decent portion of this loss comes from the accounting procedures involved in their numerous acquisitions. Overall, I think that they are growing at a decent rate, however they are losing a lot of money through their acquisitions. I think that viewing their Q1/2 earnings reports will give more insight into how these companies are performing for them, which could help me to make sense of their large losses.
  • 2021 Q1/2 Financial Performance: For the first half of 2021, ALPP has reported revenues of $22.5M, which puts them on pace to beat their previous yearly revenues by 34%. Furthermore, their cost of revenue is on track to increase by 27%, indicating that their gross margins are likely to increase YoY. Unfortunately, it is not all good news, as ALPP is on track to reporting a net loss of $18.5M, which would represent an increase of 130%, which is making me worry about their future potential, they keep digging themselves a deeper and deeper hole. However, majority of tis loss comes from their acquisitions of Thermal Dynamics, and KAI Enterprises which were both purchased in Q1, and 66% of the net loss this year has come from their Q1 losses.
  • Equity Compensation Plan: Currently, there are 210,000 shares that are authorized to be issued under Alpine 4 Holding’s Equity Compensation Plan. If these shares were to be issued, it would have a dilutionary effect of 0.1%, which is essentially negligible.
  • Direct Offering: In 2021, ALPP has partaken in a direct offering in which they sold 8.33M shares for $50M to investors. The listing of these shares had a dilutionary effect on ALPP of 6.1%. This news also caused a 12% drop (February 11th – February 12th).

Management Team:

Kent B. Wilson (CEO):

Prior to being CEO of Alpine 4 Holdings, Mr. Wilson was the CFO of United Petroleum, dealing with their financials, operations, and their supply chain. Prior to this Mr. Wilson was the CEO of Crystal Technologies, who are in the automotive and insurance industries. Overall, Mr. Wilson has a deep history in management and finance, which should bode him well as the CEO of a conglomerate company.

Ian Kantrowitz (Founder/VP of Investor Relations):

Prior to ALPP, Mr. Kantrowitz was a project manager for both Continental Homes and Engle Homes, and prior to that he was the 5th best performing banker at Wells Fargo. I believe that Mr. Kantrowitz’s experience in both management and financial positions makes him a valuable asset to the ALPP team.

Jeffrey Hail (COO):

Mr. Hail has plenty of experience in both the government and private sectors. Mr. Hail achieved this by working at the Arizona Department of Transportation, and then transitioned to the private sector in niche sectors. Overall, there is not too much detail about Mr. Hail’s previous work and responsibilities, which leads me to believe that he is the least fit out of the bunch to be a part of the ALPP management team.

Larry Zic (Chief Accounting Officer):

Mr. Zic has an abundance of knowledge in the space that stems back to his days as CFO of an International retail business, Senior VP of Finance at Sake Inc. Furthermore, Mr. Zic graduated with a dual degree in Accounting and Computer Information, and also has received his CPA. Overall, Mr. Zic has the experience necessary to be in one of the top management positions at ALPP.

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read-time
5 min

5.63

Target Price

1/ 10

Confidence

2-6 Months

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