Loss-Making Gogo Inc (NASDAQ:GOGO) Expected To Breakeven

Gogo Inc’s (NASDAQ:GOGO): Gogo Inc., through its subsidiaries, provides inflight broadband connectivity and wireless entertainment services to the aviation industry in the United States and internationally. The US$749.46M market-cap company announced a latest loss of -US$171.99M on 31 December 2017 for its most recent financial year result. As path to profitability is the topic on GOGO’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for GOGO.

See our latest analysis for Gogo

GOGO is bordering on breakeven, according to analysts. They expect the company to post a final loss in 2019, before turning a profit of US$35.18M in 2020. GOGO is therefore projected to breakeven around 2 years from today. What rate will GOGO have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 50.41%, which signals high confidence from analysts. If this rate turns out to be too aggressive, GOGO may become profitable much later than analysts predict.

NasdaqGS:GOGO Past Future Earnings Mar 30th 18
NasdaqGS:GOGO Past Future Earnings Mar 30th 18

Given this is a high-level overview, I won’t go into detail the detail of GOGO’s upcoming projects, but, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one issue worth mentioning. GOGO currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

This article is not intended to be a comprehensive analysis on GOGO, so if you are interested in understanding the company at a deeper level, take a look at GOGO’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further research:

  1. Valuation: What is GOGO worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether GOGO is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Gogo’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.