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Why Boingo Wireless Stock Skyrocketed Today

By Evan Niu, CFA - Mar 1, 2021 at 12:54PM

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The telecommunications specialist reported quarterly results and has decided to go private.

What happened

Shares of Boingo Wireless (WIFI) have skyrocketed today, up by 24% as of 12:15 p.m. EST, after the company reported fourth-quarter earnings. The results were less relevant than news that Boingo Wireless is going private in an $854 million deal.

So what

Revenue in 2020 declined 10% to $237.4 million, which resulted in a net loss of $17.1 million, or $0.38 per share, for the year. The telecommunications company said it has been focused in managing its expenses in order to improve profitability, allowing it to boost adjusted EBITDA modestly despite the decrease in sales.

Green stock chart going up

Image source: Getty Images.

"The headwinds resulting from COVID-19 accelerated the anticipated decline in our Legacy retail and advertising products as well as delayed progress on several projects into 2021," CEO Mike Finley said in a statement. "Despite these challenges, we did an incredible job maintaining velocity in the business in 2020."

Now what

More importantly, Boingo Wireless has agreed to be acquired by Digital Colony, a private equity firm that focuses on investing in digital infrastructure such as cell towers or data centers. Digital Colony will pay $14 per share in cash, which represents a 23% premium compared to Friday's closing price. The investment firm will also assume $199 million of Boingo's debt, bringing the total deal's value to $854 million.

"We are pleased to have reached this agreement with Digital Colony, which will deliver significant and immediate value to Boingo's stockholders and concludes a robust strategic review process undertaken by Boingo over the past year," Finley added. The transaction is expected to close in the second quarter.

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