Alaska Air Group, Inc. (ALK): A Bear Case Theory

 We came across a bearish thesis on Alaska Air Group, Inc. on r/wallstreetbets by NorthcoteTrevelyan. In this article, we will summarize the bears’ thesis on ALK. Alaska Air Group, Inc.'s share was trading at $49.66 as of January 15th. ALK’s trailing and forward P/E were 41.04 and 8.47 respectively according to Yahoo Finance.

Alaska Airlines ($ALK) is presented as a short thesis built around structural failures in its loyalty program, weak technology controls, and unexplained accounting movements that together pose material operational, regulatory, and valuation risk. The core allegation is that ALK’s mileage program has been repeatedly compromised over several years, allowing hackers to drain customer accounts, alter notification emails, and redeem miles for premium international travel, with little evidence that the underlying systems have been fixed.

Public forums documented at least 370 confirmed mileage-account hacks in 2025 alone, including a disproportionate number from small niche communities, suggesting the true scale among Alaska’s broader loyalty base could be far larger. Despite repeated incidents, the company’s response has reportedly been to restore points quietly while restricting affected customers’ account access, rather than addressing root-cause vulnerabilities such as authentication controls.

Beyond reputational damage, the thesis argues that loyalty-program mismanagement creates significant financial risk given management’s own assertion that the program is worth roughly $12 billion versus a ~$5.5 billion market capitalization. Concerns intensified in Q2 2025 when Alaska unexpectedly recorded a $180 million increase in loyalty liabilities without a corresponding revenue offset, alongside a simultaneous $195 million spike in receivables from Bank of America, its co-branded credit card partner. By Q3, roughly $120 million of those receivables migrated from current to non-current assets, raising questions around collectability and disclosure.

The most acute risk centers on governance and legal exposure, with claims that Alaska has declined to involve law enforcement even when fraudsters were actively traveling, potentially to avoid creating public records that could establish a data breach. If validated, these issues could trigger regulatory scrutiny, impair the loyalty program’s economics, and pressure the equity. The trade expresses this view via long-dated put options expiring in April 2026, positioning for downside driven by operational failures, accounting questions, and potential enforcement actions.

Previously, we covered a bullish thesis on “Delta Air Lines, Inc. (DAL)” by “jaunty_quant” in “October 2024”, which highlighted the “undervaluation, strong technical indicators, premium positioning, and resilient cash flows.” DAL's stock price has appreciated by approximately 40.46% since our coverage as the thesis played out.“NorthcoteTrevelyan” shares a contrarian but emphasizes on “operational failures, governance risk, and accounting irregularities” in Alaska Air Group.

Alaska Air Group, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held ALK at the end of the third quarter which was 41 in the previous quarter. While we acknowledge the potential of ALK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.