Gogo Inc Dives on Earnings Miss, Future Still Looks Promising

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The internet continues to be a major necessity in our society today and while is wide usage of the internet, the largest growth source for internet usage itself lies in aircraft travel.  On board WiFi and wireless entertainment has been a developmental plan for years now and now, more and more airlines are making this a staple to attract more flyers and customers from competitors.  Southwest Airlines Co (NYSE:LUV) is one such airline has that really jumped on the WiFi bandwagon for its aircraft and there is certainly more room to run for this infant industry. Gogo Inc (NASDAQ:GOGO) is one such company that provides on board aircraft WiFi solutions.

Gogo Inc’s stock down 6%

Unfortunately, the stock is down over -6% today after earnings miss.  The company reported earnings of -$0.29 earnings per share on revenue of $100 million.  Earnings per share was forecasted to come in at -$0.26, but revenue was in line with estimates, and represents the company’s first $100 million in quarterly revenue.  However, earnings per share is down -32% year over year, but revenue is up 22% year over year.  Sales, quarter over quarter, are up 25.30% and earnings per share are up 73.80% during the same period.

Gogo Inc (NASDAQ:GOGO) is still in a growth stage of business, meaning the company is still getting in the groove and trying to get its name and brand out there to the big airlines.  However, it is only a matter of time before every airline has WiFi enabled service.  It is something that is often talked about and definitely represents the next area for airliners to compete with one another and create more productivity and entertainment to flyers.  Indirectly aiding Gogo with wooing airlines is the fact that oil prices are down big to $78 a barrel.  As oil prices fall, revenues and earnings rocket higher for airliners that get to spend less and save on fueling charges.  This excess in saving then can be used to improve other aspects of their business such as purchasing new planes for fleet, fixing planes, adding WiFi, lowering ticket prices, etc.

The bottom line here is that overnight success is not in the cards for Gogo Inc (NASDAQ:GOGO).  The company is making strides, no doubt, but earnings per share down -32% year over year is a concern and definitely shows that Gogo still has some ways to go to get on its feet, profitable, and a fighting force in the industry.  Short sellers are certainly bearish on the stock, with nearly 27% short float.  This additionally creates obstacles for Gogo as well.  However, over the next several years, I think Gogo will be able to regain its footing and make an impact on the way that people fly.

Disclosure: None

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