• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Airline Divvies Up Wi-Fi: Time to Go on Gogo?

Gogo shares are volatile after American Airlines deal. 
By ANDERS KEITZ Jun 06, 2016 | 04:04 PM EDT
Stocks quotes in this article: GOGO, AAL, VSAT, VA, UAL

Gogo (GOGO) shares were riding the stock market roller-coaster Monday after news that American Airlines (AAL) split its order for in-flight Wi-Fi between two providers.

American announced the agreement Friday, choosing ViaSat (VSAT) to provide service on roughly 100 of its Boeing (BA) 737 jets. Gogo will service about 430 other American aircraft, according to a note Monday from William Blair analysts. Also in the note, however, is American's option to de-install Gogo equipment on 550 aircraft within its fleet at any time.

Some shareholders might have anticipated the news from American, had they paid attention to Genevieve Kahr of Ailanthus Capital Management at the Sohn Next Wave conference (during which American was suing Gogo -- a sign of troubles to come, perhaps). Kahr presented Gogo as the first short idea of the meeting.

In her presentation, she found the company's claims of 74% "win share" on new business was misleading, as many of the wins were not contracted deals. Furthermore, Kahr pointed out that for a company that has been in business since 2008, the in-flight provider is cash-flow negative, highly leveraged with significant debt maturity that will be due in 2018.

The American deal is the latest blow to the in-flight broadband firm, which held 94% of the market share in 2010 as the only online service provider for flights. Since then, high-profile client Virgin America (VA) has ceased using its  services and now American is splitting service providers.

Even with the market dilution, the William Blair analysts still believe Gogo has an attractive valuation. With shares trading at an enterprise value of 1.7x the 2016 revenue estimate, William Blair reaffirmed its Outperform rating.

Despite such optimism by William Blair, TheStreet's Jim Cramer said on CNBC's Squawk on the Street that is time to stop trading Gogo. Cramer said American's move is all about Netflix (NFLX), which is available on ViaSat but not Gogo. 

ViaSat shares have grown more than 21% on the year, while Gogo's have plummeted more than 48%.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities. 

TAGS: Investing | U.S. Equity

More from Investing

Insiders Increase Selling Activity to Last March's Levels

Guy Ortmann
Jan 22, 2021 10:39 AM EST

Charts remain constructive, but some of the psychology levels have intensified their warning signals.

Nano One Materials Is a Rare, Truly Innovative Company

Jim Collins
Jan 22, 2021 10:00 AM EST

It's patented One-Pot process allows for coating of the cathodes of lithium-ion batteries with a cobalt-free, nickel-rich substance.

What's Up With the SPAC Silver Spike Acquisition?

Bruce Kamich
Jan 22, 2021 9:58 AM EST

WM Holdings, a cloud software provider for the cannabis industry, will soon be coming public by a reverse merger with SSPK.

Vaping Company First Major Chinese Listing on U.S. Markets This Year

Alex Frew McMillan
Jan 22, 2021 9:00 AM EST

The maker of the RELX brand of vape pens and e-cigarettes - the market leader in China - hopes to take the company global.

How to Play Chipotle Stock Right Now

Bruce Kamich
Jan 22, 2021 8:58 AM EST

The shares are close to several price targets.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 07:54 AM EST GARY BERMAN

    Friday Morning Fibocall for 1/22/2021

    SPX (Long-Term View) The 1/21/21 NEW high @ 3861...
  • 11:16 AM EST CHRIS VERSACE

    Worst Stocks to Buy for the Biden Presidency

    Biden's take on the minimum wage, likely moves on ...
  • 08:35 AM EST GARY BERMAN

    Thursday Morning Fibocall for 1/21/2021

    SPX (Long-Term View) The 1/20/21 NEW high @ 3859...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login