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Why Gogo Stock Jumped Today

By Demitri Kalogeropoulos – Updated Nov 4, 2021 at 11:57AM

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Demand trends are still accelerating for the in-flight broadband provider.

What happened

In-flight broadband specialist Gogo (GOGO -2.87%) trounced the market in early trading Thursday, rising as high as 14% before settling down to roughly a 6% gain by 11 a.m. EDT.

The company announced solid operating results before the opening bell and lifted its outlook for the wider 2021 year.

Passengers wearing masks on an airplane.

Image source: Getty Images.

So what

Gogo reported a 31% sales increase year over year for the selling period that ended in late September thanks to a continuing rebound in demand for business aviation connectivity. Sales were also higher compared to the fiscal second quarter, and Gogo notched an uptick in both the number of aircraft it is servicing and the average monthly revenue per aircraft.

Management was especially pleased with the company's $20 million in net income that marked its first quarter of positive earnings in its history. "Our Gogo team is doing a great job exceeding customers' expectations and turning demand into top and bottom-line growth," CEO Oakleigh Thorne said in a press release.

Now what

The outlook seems bright in both the short term and the long term. Gogo lifted its 2021 financial guidance to call for sales of about $335 million. Adjusted earnings will land between $140 million and $145 million, it predicts, up from the prior forecast of just over $140 million.

Management sees no slump in business-travel demand, either, in 2022 or beyond. That outlook has the company feeling confident it can grow sales at a compound annual rate of around 15% per year through 2025.

For the stock's gains this year to hold, though, Gogo will need to demonstrate that it can continue generating positive earnings and cash flow. That target is looking easier as demand trends accelerate for both its equipment and monthly connectivity services.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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