Shares of Gogo (NASDAQ:GOGO) sank on Thursday, down 13% at 12:45 p.m. EST. There was no company-specific news for the provider of inflight internet services, so it's likely the stock is getting caught up in the turmoil sweeping the airline industry.
The novel coronavirus outbreak that originated in China has gone global, with confirmed cases in dozens of countries. Demand for travel has taken a hit due to travel bans, event cancellations, and cautiousness on the part of consumers.
U.S. airlines have begun warning about negative impacts from the outbreak. United Airlines plans to cut domestic flights by 10% and international flights by 20% next month, and it's frozen hiring for noncritical positions.
Southwest Airlines has seen demand significantly decline in recent days, prompting the company to predict a $200 million to $300 million hit to revenue in the first quarter.
With Gogo's revenue dependent on usage of its services on aircraft, a slump in travel demand is not good news for the small-cap stock. It's possible the pain for airlines will be short lived, although it's also possible that demand for flights will be depressed for the next several quarters or longer.
Gogo is scheduled to report its fourth-quarter results on March 13. The company will likely provide an update on the outbreak's impact at that time.