Gogo chose to register for its initial public offering (IPO) of shares on the Friday before Christmas.
But if the company was hoping that the end-of-week, pre-holiday timing of its filing with the SEC would enable it to fly beneath the radar of scrutiny, it was mistaken.
From the moment Gogo’s prospectus – with consolidated financial statements – was published on the SEC’s web site, people have been picking it apart in hopes of deciphering take rates for the company’s domestic US in-flight Internet solution and its revenue share with airline partners.
Gogo says that, from the inception of its service in August 2008 to 30 September 2011, it provided more than 15 million Gogo sessions to more than 4.4 million registered unique users, equating to roughly 4% take-up, notes NYC Aviation.
A separate industry source says: “[It’s] not explicitly stated but [it] looks like a 15% revenue share to the airline; and total passenger revenue of ~$70K per plane this year – i.e. a ~5% take rate.”
Is Gogo a good investment or does the firm need to persuade people that “spend per passenger will double in two to three years”, as suggested by our industry source? Have your say in the comments section of this blog.
December 25, 2011 at 12:50 am
I do not know a lot about the mechanics of pricing such an IPO, in light of such financials. lawsuit(s) and other considerations being priced into the issue or not. But if the uptake of the Gogo service is currently only 3-5% of passengers, one would think that there must be huge upside for the company, as the investments are made and every additional passenger utilizing the service is pure incremental revenue.
So, it seems to me, for Gogo there is huge upside potential – it’s a pure marketing play once the system is there; they just have to convince more to use it. Now, whether this upside is already priced into the shares, I do not know. If it is, then there is not upside for the investors – only risk.
December 29, 2011 at 3:08 am
Just saw the article posted on Time Magazine:
http://techland.time.com/2011/12/28/airline-passengers-not-so-keen-on-wi-fi-in-the-sky/
So I figured I would track down Mary Kirby at APEX and get her take on it. By the looks of it there won’t be any new GOGO shares under the Christmas tree at the Kirby house hold this year.
Merry Christmas Mary!