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Gogo Ends Down on First Day of Trading

On it’s first day of trading shares of Gogo Inc. (NASDAQ: GOGO) fell 6 percent to close at $16.00.

If you travel frequently, you already know about Gogo. The company provides in-flight internet service on select aircraft. According to the Wall Street Journal, the company had installed its equipment on 1,908 aircraft as of April 1 which includes service on nine out of 10 airlines in North America. This represents 81 percent of the internet-enabled North American aircraft in service.

But there’s a lot of room for growth. Only about one-third of North American aircraft are wired for service. The company expects to install service on 390 additional North American aircraft with 140 being completed by the end of 2013.

The problem, however, is that most people aren’t logging on. Out of the more than 250 million passengers who travel on aircraft equipped with the service, only 5.3 percent logged on to Gogo in 2012. In that number, there were paying customers as well as those who received promotional passes. That’s up from 4.6 percent in 2011 but still nothing that will make investors excited.

But the FAA may have helped the company. The agency announced that it’s likely to relax the rules regarding laptops and mobile devices that may make them available throughout the entire flight. Although the FAA hasn’t officially ruled, this change, or any policy that allows flyers to be engaged with their devices for longer is certain to attract more business.

Disclosure: At the time of this writing, the author had no position in the equities mentioned.

 

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