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When Will Gogo Inc. (NASDAQ:GOGO) Turn A Profit?

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·3-min read
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  • GOGO

We feel now is a pretty good time to analyse Gogo Inc.'s (NASDAQ:GOGO) business as it appears the company may be on the cusp of a considerable accomplishment. Gogo Inc., through its subsidiaries, provides inflight broadband connectivity and wireless entertainment services to the aviation industry in the United States and internationally. With the latest financial year loss of US$49m and a trailing-twelve-month loss of US$69m, the US$1.5b market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Gogo will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Gogo

Consensus from 7 of the American Wireless Telecom analysts is that Gogo is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$71m in 2022. The company is therefore projected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 104%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Gogo's upcoming projects, however, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Gogo is it currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

There are too many aspects of Gogo to cover in one brief article, but the key fundamentals for the company can all be found in one place – Gogo's company page on Simply Wall St. We've also put together a list of essential factors 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 background.

  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.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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